BILL Holdings, Inc 10-Q for FY2027 Q1
BILL Holdings, Inc. (BILL)
10-Q
2026-11-06
For: 2026-09-30
View Original
Added on
November 06, 2026
About this 10-Q
BILL Holdings, Inc filed this 10-Q on November 6, 2026, covering the quarter ended September 30, 2026 (FY2027 Q1).
BILL reported revenue of $353.8 million for the three months ended September 30, 2026, versus $314.5 million, and net income of $60.3 million compared with a $3.0 million loss. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $353.77M
- up 12.5% from $314.45M a year earlier
- Net income
- $60.25M
- compared with a net loss of $2.96M a year earlier
- Diluted EPS
- $0.61
- compared with -$0.03 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 10-Q
_____________________
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from ________ to ________
Commission File Number: 001-39149
_____________________
(Exact name of registrant as specified in its charter)
_____________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
(650 ) 621-7700
| (Registrant’s telephone number, including area code) | ||||||||
| (Former name, former address and former fiscal year, if changed since last report ) | ||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| x | Accelerated filer | o | |||||||||
| Non-accelerated filer | o | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of October 29, 2026, the registrant had 85,883,042 shares of common stock, $0.00001 par value per share, outstanding.
BILL HOLDINGS, INC.
TABLE OF CONTENTS
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 | I | ||||||||||
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” and similar expressions are intended to identify forward-looking statements.
Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
•our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit, and operating expenses, and our ability to sustain and expand profitability;
•our business plan and our ability to effectively manage our growth;
•our market opportunity, including our total addressable market;
•anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;
•our ability to further attract, retain, and expand our customer base;
•the political, economic, and macroeconomic climate, including economic downturns or recessions, inflation, significant political and regulatory developments or changes in trade policy, including government budget cuts, government shutdowns and tariffs, fluctuations in market interest rates and currency exchange rates, cybersecurity events, ongoing geopolitical conflicts and related supply chain disruptions, increases in the cost of memory, computing power, and related raw materials, and actual or perceived instability in the U.S. and global banking systems, and their impact on our customers, partners, vendors, employees, results of operations, liquidity, and financial condition;
•our ability to develop new products and services (including artificial intelligence (AI) products and services) and bring them to market in a timely manner;
•the effects of seasonal trends on our results of operations;
•our expectations concerning relationships with third parties, including partners;
•our ability to maintain, protect, and enhance our intellectual property;
•the effects of increased competition in our markets and our ability to compete effectively, including as a result of the ongoing rapid development and adoption of new AI capabilities;
•future acquisitions or investments in complementary companies, products, services, or technologies;
•our international expansion plans and ability to expand internationally;
•beliefs and objectives for future operations;
•our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business;
•economic and industry trends, projected growth, or trend analysis;
•our ability to attract and retain qualified talent;
•the increased expenses associated with being a publicly-listed and regulated company;
•our expectations regarding continued repurchases of shares of our common stock, including the timing, manner, amount, and impact of any repurchases;
•our expectations regarding our outstanding convertible senior notes, including the related capped call transactions, and any potential repurchases of convertible senior notes or plans to settle conversions;
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•our ability to release a significant portion of our valuation allowance in the U.S. in the next 12 months; and
•the future market prices of our common stock.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or to changes in our expectations, except as required by law.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.
You should read this Quarterly Report on Form 10-Q and the documents that we reference herein, that we have filed with the Securities and Exchange Commission (SEC) as exhibits, with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.
In this Quarterly Report on Form 10-Q, the words "we," "us," and "our" refer to BILL Holdings, Inc. (BILL) together with its wholly-owned subsidiaries, unless the context requires otherwise.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BILL HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
| September 30, 2026 | June 30, 2026 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Short-term investments | |||||||||||
| Accounts receivable, net | |||||||||||
Acquired card receivables, net of allowances of $ | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Funds held for customers | |||||||||||
| Total current assets | |||||||||||
| Non-current assets: | |||||||||||
| Operating lease right-of-use assets, net | |||||||||||
| Property and equipment, net | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued compensation and benefits | |||||||||||
| Deferred revenue | |||||||||||
| Other accruals and current liabilities | |||||||||||
| Convertible senior notes, net | |||||||||||
| Customer fund deposits | |||||||||||
| Total current liabilities | |||||||||||
| Non-current liabilities: | |||||||||||
| Deferred revenue | |||||||||||
| Operating lease liabilities | |||||||||||
| Borrowings from credit facilities | |||||||||||
| Convertible senior notes, net | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
Commitments and contingencies (Note 11) | |||||||||||
| Stockholders' equity: | |||||||||||
| Common stock | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
| 3 | ||||||||||
BILL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
Subscription and transaction fees (1) | $ | $ | |||||||||||||||||||||
| Interest on funds held for customers | |||||||||||||||||||||||
Total revenue (1) | |||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Service costs | |||||||||||||||||||||||
Depreciation and amortization (2) | |||||||||||||||||||||||
| Total cost of revenue | |||||||||||||||||||||||
Gross profit (1) | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
Sales and marketing (1) | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Provision for expected credit losses | |||||||||||||||||||||||
Depreciation and amortization (2) | |||||||||||||||||||||||
| Restructuring | |||||||||||||||||||||||
Total operating expenses (1) | |||||||||||||||||||||||
| Income (loss) from operations | ( | ||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Income (loss) before provision for income taxes | ( | ||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | ||||||||||||||||||||
| Net income (loss) per share attributable to common stockholders: | |||||||||||||||||||||||
| Basic | $ | $ | ( | ||||||||||||||||||||
| Diluted | $ | $ | ( | ||||||||||||||||||||
Weighted-average number of common shares used to compute net income (loss) per share attributable to common stockholders: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
(1) Prior period amounts have been retrospectively adjusted to reflect a change in accounting principle adopted in the first quarter of fiscal 2027 related to the presentation of rewards. Refer to Note 1 for additional information.
(2) Depreciation and amortization does not include amortization of capitalized internal-use software costs paid in cash of $10.5 million and $4.5 million during the three months ended September 30, 2026 and 2025, respectively, which are included in service costs and general and administrative in the condensed consolidated statements of operations.
See accompanying notes to condensed consolidated financial statements.
| 4 | ||||||||||
BILL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, in thousands)
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | ||||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Net unrealized gain (loss) on investments in available-for-sale securities | ( | ||||||||||||||||||||||
| Comprehensive income | $ | $ | |||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
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BILL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands)
| Common stock | Additional paid-in capital | Accumulated other comprehensive income | Accumulated deficit | Total stockholders' equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
Issuance of common stock upon exercise of stock options and release of restricted stock units, net of shares withheld and retired for tax | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
| Repurchase and retirement of common stock, including excise tax | ( | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
| Common stock | Additional paid-in capital | Accumulated other comprehensive loss | Accumulated deficit | Total stockholders' equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance at June 30, 2026 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Issuance of common stock upon exercise of stock options and release of restricted stock units, net of shares withheld and retired for tax | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
| Repurchase and retirement of common stock, including excise tax | ( | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
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BILL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| Three Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
| Stock-based compensation | |||||||||||
| Amortization of intangible assets | |||||||||||
| Depreciation of property and equipment | |||||||||||
| Amortization of capitalized internal-use software costs and other paid in cash | |||||||||||
| Amortization of debt discount and issuance costs | |||||||||||
| Accretion of discount on investments in marketable debt securities | ( | ( | |||||||||
| Accretion of discount on loans held for investment | ( | ( | |||||||||
| Provision for expected credit losses on acquired card receivables and other financial assets | |||||||||||
| Provision for expected credit losses on loans held for investment | |||||||||||
| Non-cash operating lease expense | |||||||||||
| Impairment of operating lease right-of-use assets and property and equipment | |||||||||||
| Other | |||||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | |||||||||||
| Prepaid expenses and other current assets | ( | ||||||||||
| Other assets | ( | ( | |||||||||
| Accounts payable | ( | ( | |||||||||
| Other accruals and current liabilities | ( | ||||||||||
| Operating lease liabilities | ( | ( | |||||||||
| Deferred revenue | ( | ||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of corporate and customer fund short-term investments | ( | ( | |||||||||
| Proceeds from maturities and sales of corporate and customer fund short-term investments | |||||||||||
| Purchases of loans held for investment | ( | ( | |||||||||
| Principal repayments of loans held for investment | |||||||||||
| Acquired card receivables, net | ( | ( | |||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Capitalization of internal-use software costs | ( | ( | |||||||||
| Other | ( | ||||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||
| 7 | ||||||||||
| Three Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from financing activities: | |||||||||||
| Customer fund deposits liability | ( | ( | |||||||||
| Prepaid card deposits | ( | ||||||||||
| Repurchase of common stock | ( | ( | |||||||||
| Proceeds from line of credit borrowings | |||||||||||
| Proceeds from exercise of stock options | |||||||||||
| Tax withholdings related to net share settlements of equity awards | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | |||||||||||
| Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents | ( | ( | |||||||||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period | |||||||||||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period | $ | $ | |||||||||
| Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows above: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash included in other current assets | |||||||||||
| Restricted cash included in other assets | |||||||||||
| Restricted cash and restricted cash equivalents included in funds held for customers | |||||||||||
| Total cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
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BILL HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
Bill.com, Inc. was incorporated in the State of Delaware in April 2006. Bill.com Holdings, Inc. was incorporated in the State of Delaware in August 2018 (and renamed BILL Holdings, Inc. in February 2023). In November 2018, Bill.com, Inc. consummated a reorganization with BILL Holdings, Inc., resulting in the latter becoming the parent entity of Bill.com, Inc. BILL Holdings, Inc. and its wholly-owned subsidiaries are collectively referred to as the “Company”.
The Company is a provider of software and payments products for small and midsized businesses designed to simplify, digitize and automate back-office financial processes, including cloud-based payments, accounts payable, accounts receivable, and spend and expense management.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and were prepared in conformity with U.S. generally accepted accounting principles (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all normal and recurring adjustments that are, in the opinion of management, necessary to state fairly the Company’s financial position, results of operations, comprehensive income, changes in stockholders’ equity, and cash flows for the periods presented. The results of operations for the three months ended September 30, 2026 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2027 or for any other future annual or interim period. The unaudited condensed consolidated balance sheet as of June 30, 2026 included herein was derived from the audited financial statements for the year ended June 30, 2026, but does not include all disclosures including certain notes required by GAAP on an annual reporting basis. All intercompany accounts and transactions have been eliminated.
These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2026 (2026 10-K).
Segment Reporting
The Company operates as one operating segment because its chief operating decision maker (CODM), who is the Chief Executive Officer, reviews its financial information on a consolidated basis with net income (loss) as the primary measure of segment profitability for purposes of making decisions regarding allocating resources and assessing performance. The CODM uses this measure to evaluate the Company’s operational efficiency and profitability, make strategic capital allocation decisions, and assess progress against financial targets, and is regularly provided with financial results comparing actual performance to budgeted targets and prior periods. The CODM does not evaluate the performance of the operating segment using asset information.
On a regular basis, the Company’s CODM is provided with significant segment expenses as reported within the condensed consolidated statements of operations, adjusted for depreciation, amortization and restructuring, as presented in the condensed consolidated statements of operations, stock-based compensation (refer to Note 8), and amortization of debt issuance costs (refer to Note 9). Other items included in the segment's profit or loss measure are interest income, interest expense (refer to Note 9), and provision for income taxes presented in the condensed consolidated statements of operations and comprehensive income. In addition, on a regular basis the CODM is also provided with losses from fraud, which are included in general and administrative, and were $7.4 million and $6.8 million for the three months ended September 30, 2026 and 2025, respectively.
Total revenue from external customers outside of the U.S. was less than 3
| 9 | ||||||||||
Reclassification
Certain accounts in the prior period consolidated statements of cash flows were reclassified to conform with the current year presentation.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make various estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes. Management regularly assesses these estimates, including, but not limited to, useful lives of long-lived assets; capitalization of internal-use software costs; the estimate of expected credit losses on accounts receivable, acquired card receivables, and loans held for investment; accrual for rewards; benefit periods used to amortize deferred costs; reserve for losses on funds held for customers; valuation of deferred tax assets; and valuation of long-lived assets. The Company evaluates these estimates and assumptions and adjusts them accordingly. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements.
Goodwill
Goodwill represents the excess of the purchase price of the acquisition over the net fair value of identifiable assets acquired and liabilities assumed. Goodwill amounts are not amortized. The Company monitors goodwill for impairment on at least an annual basis, or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable. No triggering events indicating possible impairment were identified during the three months ended September 30, 2026 or in any prior period. The Company continually evaluates its current and estimated future financial results, macroeconomic environment and industry-specific conditions, which are subject to many uncertainties, including the impact of government budget cuts, government shutdowns and tariffs, volatility related to changes in rates of inflation, interest rates, the strength of the U.S. dollar, geopolitical conflicts, and the potential for a slowing economy. These conditions, if sustained or exacerbated, could negatively impact the estimated fair value of the Company’s single reporting unit. As a result, the Company may be required to perform a quantitative goodwill impairment test in a future period, which could result in a non-cash impairment charge.
Impairment of Long-lived Assets
The Company evaluates long-lived assets, including operating lease right-of-use (ROU) assets, property and equipment and finite-lived intangible assets, for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, including, but not limited to, significant adverse changes in business climate, market conditions, or other events that indicate an asset's carrying amount may not be recoverable. The evaluation is performed at the asset group level, which represents the lowest level of identifiable cash flows. Recoverability is measured by comparing the carrying amount of each asset group to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows are less than the carrying amount, the carrying amount of such assets is reduced to fair value.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, restricted cash, restricted cash equivalents, short-term investments, accounts receivable, acquired card receivables and loans held for investment (collectively referred to as Financial Assets). The Company maintains its cash, cash equivalents, restricted cash, restricted cash equivalents and short-term investments with large multinational financial institutions that may at times exceed federally insured limits. Management believes that the financial institutions with which the Company does business are financially sound with minimal credit risk. Management further believes the associated risk of concentration for the Company’s investments is mitigated by holding a diversified portfolio of highly rated investments consisting of money market funds and short-term debt securities.
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The Company performs credit evaluations to verify the credit quality of its Financial Assets and determine any at-risk financial instruments. As of September 30, 2026 and June 30, 2026, the allowance for expected credit losses related to accounts receivable, acquired card receivables, and loans held for investment totaled $27.3 million and $28.3 million, respectively.
There were no customers that exceeded 10% of the Company’s total revenue during the three months ended September 30, 2026 and 2025.
Foreign Currency
The functional currency of the Company's foreign subsidiary is the U.S. dollar, which is the Company's reporting currency. Gains and losses from the remeasurement of transactions denominated in foreign currencies other than the functional currency of the foreign subsidiary are included in other income, net in the accompanying condensed consolidated statements of operations.
Significant Accounting Policies
There have been no material changes to the Company’s significant accounting policies described in the 2026 10-K, except as noted below:
Change in accounting principle
Effective July 1, 2026, the Company voluntarily changed its accounting principle related to the presentation of rewards paid to spending businesses using its card products. Previously, the Company classified rewards as sales and marketing expenses within operating expenses. Under the new accounting principle, these rewards are classified as a reduction of interchange revenue within subscription and transaction fees. The Company believes this change is preferable as it better reflects the economic substance of the card rewards program and aligns the Company's financial reporting with the financial information used internally by the Company. Furthermore, the net presentation aligns the Company’s financial reporting with prevalent industry practice among fintech and card-issuing peers, enhancing comparability for investors and analysts. This change in classification had no impact on the Company’s operating income, net income (loss), net income (loss) per share, net assets, or cash flows for any period presented.
The Company applied this change retrospectively to the prior periods presented to conform with the current period presentation. The following table summarizes the effects of the change on the Company’s condensed consolidated statements of operations:
| Three Months Ended September 30, 2025 | |||||||||||||||||
| As previously reported | Effect of change | As adjusted | |||||||||||||||
| Revenue: | |||||||||||||||||
| Subscription and transaction fees | $ | $ | ( | $ | |||||||||||||
| Total revenue | ( | ||||||||||||||||
| Gross profit | ( | ||||||||||||||||
| Operating expenses: | |||||||||||||||||
| Sales and marketing | ( | ||||||||||||||||
| Total operating expenses | $ | $ | ( | $ | |||||||||||||
New Accounting Pronouncements and Disclosure Rules Recently Adopted
In July 2025, the Financial Accounting Standards Board issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326). The guidance in ASU 2025-05 provides all entities with a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of current
| 11 | ||||||||||
accounts receivable and contract assets. The Company adopted ASU 2025-05 on July 1, 2026 on a prospective basis. The adoption did not have a material impact on the condensed consolidated financial statements.
New Accounting Pronouncements and Disclosure Rules Not Yet Adopted
There have been no changes to the Company’s new accounting pronouncements and disclosures not yet adopted as described in the 2026 10-K.
NOTE 2 – REVENUE
The Company generates revenue primarily from subscription and transaction fees. For the purpose of disaggregating revenue by solutions, the Company defines BILL AP/AR as transaction and subscription revenue derived from businesses that use its core BILL accounts payable and receivable platform; BILL Spend and Expense as interchange revenue derived from BILL Divvy Card transactions; and Embedded Solutions and Other as transaction and subscription revenue from businesses that access the Company's solutions through its embedded partners' platforms and other indirect sales channels (including financial institution partners), and Invoice2go revenue. The table below shows the Company’s revenue from subscription and transaction fees, which are disaggregated by solutions, and revenue from interest on funds held for customers (in thousands).
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 (1) | ||||||||||||||||||||||
| BILL AP/AR | $ | $ | |||||||||||||||||||||
| BILL Spend and Expense | |||||||||||||||||||||||
| Integrated platform | |||||||||||||||||||||||
| Embedded Solutions and Other | |||||||||||||||||||||||
| Total subscription and transaction fees | |||||||||||||||||||||||
| Interest on funds held for customers | |||||||||||||||||||||||
| Total revenue | $ | $ | |||||||||||||||||||||
(1) Prior period amounts have been retrospectively adjusted to reflect a change in accounting principle adopted in the first quarter of fiscal 2027 related to the presentation of rewards. Refer to Note 1 for additional information.
Deferred revenue
Fees from customers with which the Company has annual or multi-year contracts are generally billed in advance. These fees are initially recorded as deferred revenue and subsequently recognized as revenue as the performance obligation is satisfied. During the three months ended September 30, 2026, the Company recognized $9.0 million of revenue that was included in the deferred revenue balances as of June 30, 2026.
Remaining performance obligations
The Company has performance obligations associated with commitments in customer contracts for future services that have not yet been recognized as revenue. As of September 30, 2026, the aggregate amount of transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied), including deferred revenue, was $52.4 million. Of the total remaining performance obligations, the Company expects to recognize approximately 64 % over the next year, 31 % between one to two years and 5 % thereafter. The Company determines remaining performance obligations at a point in time based on contracts with customers. However, actual amounts and timing of revenue recognized may differ due to subsequent contract modifications, renewals and/or terminations.
Unbilled revenue
Unbilled revenue consists of revenue recognized that has not been billed to the customers yet. Unbilled revenue was $20.0 million and $19.6 million as of September 30, 2026 and June 30, 2026, respectively, and is included in accounts receivable, net in the accompanying condensed consolidated balance sheets.
| 12 | ||||||||||
NOTE 3 – FAIR VALUE MEASUREMENT
The Company measures and reports its cash equivalents, short-term investments, funds held for customers that are invested in money market funds and marketable debt securities at fair value. Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows:
Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 — Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
Level 3 — Unobservable inputs that are supported by little or no market activity for the related assets or liabilities and typically reflect management’s estimate of assumptions that market participants would use in pricing the assets or liabilities.
In determining fair value, the Company utilizes quoted market prices, or valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, and also considers counterparty credit risk in its assessment of fair value.
| 13 | ||||||||||
The following table summarizes the fair values of the financial assets and liabilities, determined using quoted market prices of identical assets or market prices of similar assets from active markets as of the dates presented (in thousands):
| Fair Value at | |||||||||||||||||
| Pricing Category | September 30, 2026 | June 30, 2026 | |||||||||||||||
| Assets | |||||||||||||||||
| Cash equivalents: | |||||||||||||||||
| Money market funds | Level 1 | $ | $ | ||||||||||||||
| U.S. treasury securities | Level 2 | ||||||||||||||||
| Short-term investments: | |||||||||||||||||
| Corporate bonds | Level 2 | ||||||||||||||||
| U.S. treasury securities | Level 2 | ||||||||||||||||
| Asset-backed securities | Level 2 | ||||||||||||||||
| Certificates of deposit | Level 2 | ||||||||||||||||
| Funds held for customers: | |||||||||||||||||
| Restricted cash equivalents: | |||||||||||||||||
| Money market funds | Level 1 | ||||||||||||||||
| Corporate bonds | Level 2 | ||||||||||||||||
| Short-term investments: | |||||||||||||||||
| Corporate bonds | Level 2 | ||||||||||||||||
| U.S. treasury securities | Level 2 | ||||||||||||||||
| Certificates of deposit | Level 2 | ||||||||||||||||
| Asset-backed securities | Level 2 | ||||||||||||||||
| Municipal bonds | Level 2 | ||||||||||||||||
| Operating lease right-of-use assets and property and equipment | Level 3 | ||||||||||||||||
Liabilities (1) | |||||||||||||||||
| Level 2 | |||||||||||||||||
| Level 2 | $ | $ | |||||||||||||||
(1) These liabilities are carried at par value, less the unamortized issuance costs in the accompanying condensed consolidated balance sheets.
There were no transfers of financial instruments between Level 1, Level 2, and Level 3 during the periods presented.
The Company's financial instruments that are not measured and recorded at fair value, such as cash, restricted cash, acquired card receivables, loans held for investment, interest receivables, network incentive receivables, and borrowings from credit facilities, are carried at amortized cost, which approximates their fair value. If these financial instruments were measured at fair value in the financial statements, cash would be classified as Level 1; restricted cash, interest receivables, incentive receivables and borrowings from credit facilities would be classified as Level 2 and the acquired card receivables and loans held for investment would be classified as Level 3 in the fair value hierarchy.
| 14 | ||||||||||
Impairment of Operating Lease Right-of-Use Assets
During the three months ended September 30, 2026, the Company recorded non-cash impairment charges of $25.8 million, which are included in restructuring in the accompanying condensed consolidated statements of operations, for operating lease ROU assets and property and equipment as part of the Company's transition to a remote-first company. The fair values of the impaired assets were estimated using discounted cash flow models (income approach) based on market participant assumptions. The significant inputs used in the fair value measurement of the operating lease ROU assets were expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods and discount rates to reflect the level of risk associated with receiving future cash flows. As these inputs are not based on observable market data, the assets represent a Level 3 measurement within the fair value hierarchy. Refer to Note 12 for additional information.
NOTE 4 – SHORT-TERM INVESTMENTS AND FUNDS HELD FOR CUSTOMERS
The following table summarizes the assets underlying short-term investments and funds held for customers as of the dates presented (in thousands):
| September 30, 2026 | June 30, 2026 | ||||||||||
| Short-term investments: | |||||||||||
| Available-for-sale debt securities | $ | $ | |||||||||
| Total short-term investments | |||||||||||
| Funds held for customers: | |||||||||||
| Restricted cash | |||||||||||
| Restricted cash equivalents | |||||||||||
| Funds receivable | |||||||||||
| Available-for-sale debt securities | |||||||||||
| Total funds held for customers | |||||||||||
Less - interest income included in other current assets (1) | ( | ( | |||||||||
| Total funds held for customers, net of income earned by the Company | $ | $ | |||||||||
(1) Represents interest income, accretion of discount, and net unrealized gains on customer funds that were invested in money market funds and short-term marketable debt securities. The Company contractually earns interest income on these investments, which is expected to be transferred into the Company’s corporate deposit account upon sale or settlement of the associated investment, and is not considered funds held for customers.
| 15 | ||||||||||
The following table summarizes the estimated fair value of available-for-sale debt securities, included within short-term investments and funds held for customers, as of the dates presented (in thousands):
| September 30, 2026 | |||||||||||||||||||||||
| Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | ||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||
| Corporate bonds | $ | $ | $ | ( | $ | ||||||||||||||||||
| U.S. treasury securities | ( | ||||||||||||||||||||||
| Asset-backed securities | ( | ||||||||||||||||||||||
| Total short-term investments | $ | $ | $ | ( | $ | ||||||||||||||||||
| Funds held for customers: | |||||||||||||||||||||||
| Corporate bonds | $ | $ | $ | ( | $ | ||||||||||||||||||
| U.S. treasury securities | ( | ||||||||||||||||||||||
| Asset-backed securities | ( | ||||||||||||||||||||||
| Certificates of deposit | |||||||||||||||||||||||
| Municipal bonds | ( | ||||||||||||||||||||||
| Total funds held for customers | $ | $ | $ | ( | $ | ||||||||||||||||||
| June 30, 2026 | |||||||||||||||||||||||
| Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | ||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||
| Corporate bonds | $ | $ | $ | ( | $ | ||||||||||||||||||
| U.S. treasury securities | ( | ||||||||||||||||||||||
| Asset-backed securities | ( | ||||||||||||||||||||||
| Certificates of deposit | |||||||||||||||||||||||
| Total short-term investments | $ | $ | $ | ( | $ | ||||||||||||||||||
| Funds held for customers: | |||||||||||||||||||||||
| Corporate bonds | $ | $ | $ | ( | $ | ||||||||||||||||||
| Certificates of deposit | |||||||||||||||||||||||
| Asset-backed securities | ( | ||||||||||||||||||||||
| Municipal bonds | ( | ||||||||||||||||||||||
| U.S. treasury securities | ( | ||||||||||||||||||||||
| Total funds held for customers | $ | $ | $ | ( | $ | ||||||||||||||||||
The amortized cost and fair value amounts for include interest receivables of $5.4 million and $7.9 million as of September 30, 2026 and June 30, 2026, respectively. The amortized cost and fair value amounts for funds held for customers include interest receivables of $14.4
| 16 | ||||||||||
The following table summarizes fair value of the Company's available-for-sale debt securities, included within short-term investments and funds held for customers, by remaining contractual maturity as of the dates presented (in thousands):
| September 30, 2026 | June 30, 2026 | ||||||||||
| Due within 1 year | $ | $ | |||||||||
| Due in 1 year through 5 years | |||||||||||
| Due in 5 years through 10 years | |||||||||||
| Total | $ | $ | |||||||||
As of September 30, 2026, approximately 420 out of approximately 540 investments in available-for-sale debt securities were in an unrealized loss position. The following tables show gross unrealized losses and fair values for those investments that were in an unrealized loss position as of the dates presented (in thousands):
| September 30, 2026 | |||||||||||||||||||||||||||||||||||
| Less than 12 months | 12 months or longer | Total | |||||||||||||||||||||||||||||||||
| Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||||||||||||||
| Corporate bonds | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||
| U.S. treasury securities | ( | ( | |||||||||||||||||||||||||||||||||
| Asset-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Total short-term investments | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
| Funds held for customers: | |||||||||||||||||||||||||||||||||||
| Corporate bonds | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||
| U.S. treasury securities | ( | ( | |||||||||||||||||||||||||||||||||
| Asset-backed securities | ( | ( | |||||||||||||||||||||||||||||||||
| Municipal bonds | ( | ( | |||||||||||||||||||||||||||||||||
| Total funds held for customers | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||
| June 30, 2026 | |||||||||||||||||||||||||||||||||||
| Less than 12 months | 12 months or longer | Total | |||||||||||||||||||||||||||||||||
| Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||||||||||||||
| Corporate bonds | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||
| U.S. treasury securities | ( | ( | |||||||||||||||||||||||||||||||||
| Asset-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Total short-term investments | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
| Funds held for customers: | |||||||||||||||||||||||||||||||||||
| Corporate bonds | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||
| Asset-backed securities | ( | ( | |||||||||||||||||||||||||||||||||
| U.S. treasury securities | ( | ( | |||||||||||||||||||||||||||||||||
| Municipal bonds | ( | ( | |||||||||||||||||||||||||||||||||
| Total funds held for customers | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||
Unrealized losses have not been recognized into income as the Company neither intends to sell, nor anticipates that it is more likely than not that the Company will be required to sell, the securities before recovery
| 17 | ||||||||||
of their amortized cost basis. The decline in fair value is due primarily to changes in market interest rates, rather than credit losses.
There have been no
NOTE 5 – ACQUIRED CARD RECEIVABLES
As of September 30, 2026, approximately $481.4 million of the acquired card receivables balance served as collateral for the Company’s borrowings from the Revolving Credit Facilities (as defined below, see Note 7).
The Company incurred losses related to card transactions disputed by spending businesses. The amounts were not material during the three months ended September 30, 2026 and 2025.
The acquired card receivables balances do not include purchases of participation interests in card receivables from the Company's card issuing partner banks (Issuing Banks) that have not cleared at the end of the reporting period. Purchases of participation interests in card receivables that have not cleared as of September 30, 2026 totaled $74.4 million. The Company recognized an immaterial amount of expected credit losses on the card receivables that have not cleared yet as of September 30, 2026.
Credit Quality Information
The Company regularly reviews collection experience, delinquencies, and net charge-offs in determining allowance for expected credit losses related to acquired card receivables. Historical collections rates have shown that days past due is the primary indicator of the likelihood of loss. The Company uses the delinquency trends or past due status of the acquired card receivables as the credit quality indicator. Acquired card receivables are considered past due if full payment is not received on the bill date or within a grace period, which is generally limited to five days . Below is a summary of the acquired card receivables by class (i.e., past due status) as of the dates presented (in thousands):
| September 30, 2026 | June 30, 2026 | ||||||||||
| Current and less than 30 days past due | $ | $ | |||||||||
| 30 ~ 59 days past due | |||||||||||
| 60 ~ 89 days past due | |||||||||||
| 90 ~ 119 days past due | |||||||||||
| Over 119 days past due | |||||||||||
| Total | $ | $ | |||||||||
Allowance for Expected Credit Losses
Below is a summary of the changes in allowance for expected credit losses (in thousands):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Balance, beginning | $ | $ | |||||||||||||||||||||
| Provision for expected credit losses | |||||||||||||||||||||||
| Charge-off amounts | ( | ( | |||||||||||||||||||||
| Recoveries collected | |||||||||||||||||||||||
| Balance, ending | $ | $ | |||||||||||||||||||||
Card receivables acquired from the Issuing Banks were $7.0 billion and $6.2 billion during the three months ended September 30, 2026 and 2025, respectively. The provision for expected credit losses related to
| 18 | ||||||||||
acquired card receivables decreased during the three months ended September 30, 2026 compared to the same prior year period due to improvements in delinquency performance, which was partially offset by portfolio growth. The charge-offs related to acquired card receivables increased during the three months ended September 30, 2026 compared to the same prior year period primarily due to portfolio growth.
NOTE 6 – LOANS HELD FOR INVESTMENT
Loans held for investment represent funds advanced under a line of credit agreement, through a partnership with a third-party bank (the Originating Bank Partner). Loans held for investment are included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets and consisted of the following as of the dates presented (in thousands):
| September 30, 2026 | June 30, 2026 | ||||||||||
| Unpaid principal balance | $ | $ | |||||||||
| Less: Discount at loan purchase, net of amortization | ( | ( | |||||||||
| Less: Allowance for expected credit losses | ( | ( | |||||||||
| Loans held for investment, net | $ | $ | |||||||||
Credit Quality Information
The Company conducts an eligibility assessment prior to loan origination by the Originating Bank Partner. This process is performed at the invoice level and involves evaluating the invoice repayment likelihood by the respective network members associated with each invoice. Subsequently, the credit quality of these loans is monitored based on the delinquency trends or past due status of the loans held for investment, which are considered the credit quality indicators. Below is a summary of the loans held for investment by class (i.e., past due status) as of the dates presented (in thousands):
| September 30, 2026 | June 30, 2026 | ||||||||||
| Current and less than 30 days past due | $ | $ | |||||||||
| 30 ~ 59 days past due | |||||||||||
| 60 ~ 89 days past due | |||||||||||
| 90 ~ 119 days past due | |||||||||||
| Total | $ | $ | |||||||||
Allowance for Credit Losses
Below is a summary of the changes in allowance for credit losses presented (in thousands):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Balance, beginning | $ | $ | |||||||||||||||||||||
| Provision for expected credit losses | |||||||||||||||||||||||
| Charge-off amounts | ( | ( | |||||||||||||||||||||
| Recoveries collected | |||||||||||||||||||||||
| Balance, ending | $ | $ | |||||||||||||||||||||
| 19 | ||||||||||
NOTE 7 – DEBT AND BORROWINGS
Debt and borrowings consisted of the following (in thousands):
| Carrying Value at | ||||||||||||||||||||
| September 30, 2026 | June 30, 2026 | Expected Remaining Term (years) | Annualized Effective Interest Rate at September 30, 2026 | |||||||||||||||||
| Current liabilities: | ||||||||||||||||||||
| Convertible senior notes: | ||||||||||||||||||||
| 2027 Notes, principal | $ | $ | % | |||||||||||||||||
| Less: unamortized debt discount and issuance costs | ( | ( | ||||||||||||||||||
| Convertible senior notes, net current | ||||||||||||||||||||
| Non-current liabilities: | ||||||||||||||||||||
| Convertible senior notes: | ||||||||||||||||||||
| 2030 Notes, principal | % | |||||||||||||||||||
| Less: unamortized debt discount and issuance costs | ( | ( | ||||||||||||||||||
| Convertible senior notes, net | ||||||||||||||||||||
| Revolving credit facility: | ||||||||||||||||||||
| 2021 Credit Facility | % | |||||||||||||||||||
| 2025 Credit Facility | % | |||||||||||||||||||
Borrowings from Revolving Credit Facility (1) | ||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||
(1) Unamortized debt issuance costs balance for the Revolving Credit Facilities was $1.2 million and $1.6 million as of September 30, 2026 and June 30, 2026, respectively, and is included in other assets on the condensed consolidated balance sheets.
Convertible senior notes
2030 Notes
On December 6, 2024, the Company issued $1.4 billion aggregate principal amount of 0 % convertible senior notes due April 1, 2030 (the 2030 Notes), in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2030 Notes are subject to the terms and conditions of the indenture governing the 2030 Notes between the Company and Computershare Trust Company, N.A., as trustee (in its capacity as trustee for each of the 2030 Notes, the 2025 Notes (as defined below) and the 2027 Notes (as defined below), as applicable, the Notes Trustee). The net proceeds from the issuance of the 2030 Notes were $1.38 billion, after deducting the debt discount and debt issuance costs totaling $24.0 million.
The 2030 Notes are senior, unsecured obligations of the Company, and will not accrue interest unless the Company determines to pay special interest as a remedy for failure to timely file any reports required to be filed with the SEC, the failure to remove certain trading restrictions, or failure to deliver reports to the Notes Trustee. The 2030 Notes rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated to the 2030 Notes and rank equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated, including the 2027 Notes. In addition, the 2030 Notes are effectively junior in right of payment to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company's subsidiaries.
The 2030 Notes have an initial conversion rate of 8.3718 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of $119.45 per share of the Company’s common stock
| 20 | ||||||||||
and 11.7 million shares issuable upon conversion. The conversion rate is subject to customary adjustments for certain events as described below. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company's election. The Company’s current intent is to settle conversions of the 2030 Notes through a combination settlement, which involves a repayment of the principal portion in cash with any excess of the conversion value over the principal amount settled in shares of common stock.
The Company may redeem for cash, all or any portion of the 2030 Notes, at the Company’s option, on or after December 1, 2027 if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on and including the trading day preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the notes to be redeemed, plus any accrued and unpaid special interest to, but excluding, the redemption date. No sinking fund is provided for the 2030 Notes. The holders of the 2030 Notes may convert their notes at their option at any time prior to the close of business on the business day immediately preceding January 1, 2030 in multiples of $1,000 principal amount, under the following circumstances:
•during any calendar quarter commencing after the calendar quarter ending on December 31, 2024, and only during such calendar quarter, if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on and including the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;
•during the 5 business day periods after any 5 consecutive trading day period in which the trading price per $1,000 principal amount of the 2030 Notes for each trading day of that period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;
•if the Company calls such notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or
•upon the occurrence of specified corporate events.
The conversion rate is subject to adjustment upon the occurrence of certain events or if the Company’s board of directors determines it is in the best interest of the Company. Additionally, holders of the 2030 Notes that convert their notes in connection with a make-whole fundamental change or during the redemption period, may be eligible to receive a make-whole premium through an increase of the conversion rate based on the estimated fair value of the 2030 Notes for the given date and stock price. The make-whole premium is designed to compensate the holder for lost “time-value” of the conversion option. The maximum number of additional shares that may be issued under the make-whole premium is 2.9301 per $1,000 principal (the lowest price of $88.48 in the make whole).
The indenture governing the 2030 Notes contains customary events of default with respect to the 2030 Notes and provides that upon certain events of default occurring and continuing, the holders of the 2030 Notes will have the right, at their option, to require the Company to repurchase for cash all or a portion of their outstanding notes, at a price equal to 100 % of the principal amount of the 2030 Notes to be repurchased, plus any accrued and unpaid interest.
The "if-converted" value of the 2030 Notes did not exceed the principal amount of $1.4
| 21 | ||||||||||
2027 Notes
On September 24, 2021, the Company issued $575.0 million in aggregate principal amount of its 0 % convertible senior notes due on April 1, 2027, in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the 2027 Notes). The 2027 Notes are subject to the terms and conditions of the indenture governing the 2027 Notes between the Company and the Notes Trustee. The net proceeds from the issuance of the 2027 Notes were $560.1 million, after deducting debt discount and debt issuance costs totaling $14.9 million.
On December 6, 2024, using proceeds from the issuance of the 2030 Notes, the Company entered into privately negotiated transactions with certain holders of its 2027 Notes to repurchase $451.5 million aggregate principal amount for an aggregate cash repurchase price of $408.6 million, inclusive of transaction costs. The carrying amount of the extinguished 2027 Notes was $446.5 million, net of unamortized issuance cost of $5.0 million, resulting in a $37.9 million gain recorded in other income, net in the accompanying condensed consolidated statement of operations.
The "if-converted" value of the 2027 Notes did not exceed the principal amount of $123.5
2025 Notes
On November 30, 2020, the Company issued $1.15 billion in aggregate principal amount of its 0 % convertible senior notes due on December 1, 2025, in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the 2025 Notes, and together with the 2027 Notes and 2030 Notes, the Notes). The 2025 Notes were subject to the terms and conditions of the indenture governing the 2025 Notes between the Company and the Notes Trustee. The net proceeds from the issuance of the 2025 Notes were $1.13 billion, after deducting debt discount and debt issuance costs totaling $20.6 million.
On December 6, 2024, using proceeds from the issuance of the 2030 Notes, the Company entered into privately negotiated transactions with certain holders of its 2025 Notes to repurchase $133.9 million aggregate principal amount of the 2025 Notes for an aggregate cash repurchase price of $130.8 million, inclusive of transaction costs. The carrying amount of the extinguished 2025 Notes was $133.4 million, net of unamortized issuance cost of $0.5 million, resulting in a $2.6 million gain recorded in other income, net in the accompanying condensed consolidated statement of operations. In fiscal 2024, the Company repurchased $982.7 million aggregate principal amount of the 2025 Notes in privately negotiated transactions.
On December 1, 2025, upon maturity of the 2025 Notes, the Company settled the remaining $33.5 million aggregate principal amount of the 2025 Notes in cash.
Capped Call Transactions
In conjunction with the issuance of the 2030 Notes, the Company entered into capped call transactions (the Capped Calls) with certain financial institutions at a total cost of $93.0 million. The Capped Calls associated with the 2030 Notes are separate transactions and are not part of the terms of the 2030 Notes. The total amount paid for the Capped Calls associated with the 2030 Notes was recorded as a reduction of additional paid-in capital. The Company used a portion of the proceeds from the 2030 Notes to pay for the cost of the applicable Capped Call premium. The cost of the Capped Calls associated with the 2030 Notes is not expected to be tax-deductible as the Company did not elect to integrate the Capped Calls into the 2030 Notes for tax purposes.
The Capped Calls associated with the 2030 Notes each have an initial strike price of $119.45 per share, subject to certain adjustments, which corresponds to the respective initial conversion price of the 2030 Notes, and have an initial cap price of $154.84 per share, subject to certain adjustments; provided that such cap price shall not be reduced to an amount less than their respective strike price. The Capped Calls associated with the 2030 Notes cover, subject to anti-dilution adjustments, a total of 11.7 million shares of the Company’s common stock. The Capped Calls associated with the 2030 Notes are expected to generally reduce the potential dilution of the Company’s common stock upon any conversion of the 2030 Notes and/or offset any cash payments that
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the Company is required to make in excess of the principal amount of such converted notes, as the case may be, with such reduction and/or offset subject to a cap.
In conjunction with the issuance of the 2025 Notes and 2027 Notes, the Company entered into similar capped call transactions. In fiscal 2024, the Company terminated the capped call transactions previously entered into in connection with the issuance of the 2025 Notes.
Revolving Credit Facilities
2021 Credit Facility
The Company's Revolving Credit and Security Agreement, by and among Divvy Peach, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (Divvy Peach), and Goldman Sachs Bank USA, as administrative agent, and the lenders party thereto (as amended from time to time, the 2021 Credit Facility), was initially executed in March 2021, amended in August 2022 to finance the acquisition of card receivables from the Company by Divvy Peach (Divvy Peach Receivables) and is secured by such Divvy Peach Receivables and certain collateral, and subject to a limited guarantee by BILL Holdings, Inc. On October 29, 2025, the Company further amended the 2021 Credit Facility to extend the maturity date and reduce the interest rate from 2.65 % to 1.95 % plus SOFR (subject to a floor rate of 0.25 %) per annum. The 2021 Credit Facility matures in May 2028 or earlier pursuant to the agreement and has a total commitment of $300.0 million. The required minimum utilization is $180.0 million, or 60 % of the total commitment. Total outstanding borrowings were $180.0 million as of September 30, 2026.
2025 Credit Facility
The Company's Revolving Credit and Security Agreement by and among Odin Financing, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (Odin), JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (the 2025 Credit Facility and together with the 2021 Credit Facility, the Revolving Credit Facilities) was executed in May 2025 to finance the acquisition of card receivables from the Company by Odin (Odin Receivables), and is secured by such Odin Receivables and certain related collateral, and subject to a limited guarantee by BILL Holdings, Inc. Borrowings bear interest per annum based on SOFR or an adjusted benchmark rate plus an applicable margin of 1.80 %. The 2025 Credit Facility matures in November 2027 or earlier pursuant to the agreement and has a total commitment of $300.0 million. The required minimum utilization is $150.0 million, or 50 % of the total commitment, starting two months after execution of the agreement. Total outstanding borrowings were $150.0 million as of September 30, 2026.
Under each of the Revolving Credit Facilities, the Company is required to comply with certain restrictive covenants, including liquidity requirements. As of September 30, 2026, the Company was in compliance with such covenants.
While the financial statements of Divvy Peach and Odin are consolidated with those of the Company in the accompanying condensed consolidated financial statements, each of Divvy Peach and Odin are separate legal entities from the Company. The respective assets of Divvy Peach (including the Divvy Peach Receivables) and Odin (including the Odin Receivables) are owned by Divvy Peach and Odin, respectively, and are solely available to satisfy their respective creditors.
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NOTE 8 – STOCKHOLDERS’ EQUITY
Stock-Based Compensation
Stock-based compensation by award type (in thousands):
| Three Months Ended September 30, | As of September 30, 2026 | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Unrecognized compensation | Weighted-average recognition period (in years) | ||||||||||||||||||||||||||||||||
| Restricted stock units (RSUs) | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Performance-based awards | |||||||||||||||||||||||||||||||||||
| Employee stock purchase plan | |||||||||||||||||||||||||||||||||||
| Market-based RSUs | |||||||||||||||||||||||||||||||||||
| Stock options | |||||||||||||||||||||||||||||||||||
| Total stock-based compensation | $ | $ | $ | ||||||||||||||||||||||||||||||||
Stock-based compensation was included in the following line items in the accompanying condensed consolidated statements of operations and condensed consolidated balance sheets (in thousands):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Revenue - subscription and transaction fees | $ | $ | |||||||||||||||||||||
| Cost of revenue - service costs | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Restructuring | |||||||||||||||||||||||
| Total amount charged to income (loss) from operations | |||||||||||||||||||||||
| Property and equipment (capitalized internal-use software) | |||||||||||||||||||||||
| Total stock-based compensation | $ | $ | |||||||||||||||||||||
Share Repurchase Program
In August 2025, the Company's board of directors authorized the repurchase of up to $300.0 million in shares of its outstanding common stock (the August 2025 Share Repurchase Program).
In May 2026, the Company announced that the Company's board of directors authorized the repurchase of up to $1.0 billion in shares of its outstanding common stock, which authorization includes unused amounts under the August 2025 Share Repurchase Program (the 2026 Share Repurchase Authorization). Pursuant to this authorization, the Company may repurchase such shares from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. This authorization has a term of 24 months, may be suspended, discontinued or modified at any time, and does not obligate the Company to acquire any amount of common stock.
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The table below sets forth information regarding repurchases made pursuant to the Company's share repurchase programs as of September 30, 2026 (in thousands, except per share data):
| Period | Shares repurchased | Total amount repurchased(1) | Average price paid per share(1) | Available for future share repurchases | |||||||||||||||||||
| Fiscal 2026 | |||||||||||||||||||||||
| First quarter | |||||||||||||||||||||||
August 2024 Share Repurchase Program | $ | $ | |||||||||||||||||||||
August 2025 Share Repurchase Program | $ | ||||||||||||||||||||||
| Total | $ | ||||||||||||||||||||||
| Fiscal 2027 | |||||||||||||||||||||||
| First quarter | |||||||||||||||||||||||
| 2026 Share Repurchase Authorization | $ | $ | $ | ||||||||||||||||||||
| Total | $ | ||||||||||||||||||||||
(1) Amounts include an immaterial amount of accrued excise tax.
The total price of the shares repurchased and related transaction costs are reflected as a reduction of common stock and an increase to accumulated deficit on the Company's condensed consolidated balance sheets.
NOTE 9 – OTHER INCOME, NET
Other income, net consisted of the following for the periods presented (in thousands):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Interest income | $ | $ | |||||||||||||||||||||
| Interest expense | ( | ( | |||||||||||||||||||||
| Amortization of debt discount and issuance costs | ( | ( | |||||||||||||||||||||
| Other | ( | ( | |||||||||||||||||||||
| Total other income, net | $ | $ | |||||||||||||||||||||
NOTE 10 – INCOME TAXES
The Company’s provision for income taxes during the interim periods is determined using an estimate of the Company’s annual effective tax rate, which is adjusted for certain discrete tax items during the interim periods. The Company's income tax provision was $1.2 million and $0.1 million for the three months ended September 30, 2026 and 2025, respectively.
The Company’s effective tax rate differs from the federal statutory rate primarily due to valuation allowance positions in its federal and state jurisdictions. The income tax expense during the three months ended September 30, 2026 pertained mainly to an estimated cash tax liability and an increase in the net deferred tax liability.
The Company has subsidiaries in the U.S., Canada, and Australia and may be subject to income tax audits in those jurisdictions. The Company records liabilities related to uncertain tax positions, which provide adequate reserves for income tax uncertainties in all open tax years. Due to the Company’s history of tax losses, all years remain open to tax audit. The Company’s management evaluates the realizability of the Company’s deferred tax assets based on all available evidence, both positive and negative. The realization of net deferred tax assets is dependent on the Company’s ability to generate sufficient future taxable income during the foreseeable future.
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On July 4, 2025, President Trump signed the One Big Beautiful Bill Act of 2025 (OBBBA) into law, which extends and modifies various domestic and international business tax frameworks originally enacted under the Tax Cuts and Jobs Act. The legislation includes multiple effective dates, with certain provisions that took effect in fiscal 2026 and others taking effect through fiscal 2028. The Company has reflected the impact of the OBBBA in its condensed consolidated financial statements and will continue to evaluate any changes needed when additional guidance becomes available.
The Company regularly evaluates the realizability of its deferred tax assets (DTAs) by assessing all available evidence, both positive and negative, to determine whether it is more likely than not that some or all of the DTAs will not be realized. The Company considers its historical earnings, volatility in actual earnings, impact of permanent book to tax difference, the timing of reversal of existing temporary differences, and future profitability to assess its valuation allowance. As of September 30, 2026, substantially all of the Company's U.S. DTAs, net of deferred tax liabilities, were subject to a valuation allowance. If sufficient positive evidence emerges, some or all of the valuation allowance could be released. Such a release would result in a non-cash income tax benefit in the period of release and the recognition of additional DTAs in the accompanying condensed consolidated statements of operations and balance sheets, respectively.
Based on the Company's assessment of current income and anticipated future earnings, there is a reasonable possibility that the Company will have sufficient evidence to release a significant portion of the valuation allowance in the U.S. within the next 12 months. However, the Company's judgment regarding future earnings and the exact timing and amount of any valuation allowance release are subject to change due to many factors, including future market conditions, the ability to successfully execute the Company's business plans, and the amount of stock-based compensation tax deductions available in the future.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
Unused Credit Arrangements
As of September 30, 2026, the Company, in partnership with the Issuing Banks and the Originating Bank Partner, had approximately $4.5 billion in unused credit available to spending businesses using the Company's BILL Divvy Card product and borrowers using the invoice financing product. While this balance represents the total unused credit available, historical trends and current expectations indicate that the unused credit will likely not be fully utilized by spending businesses using the BILL Divvy Card product and borrowers using the invoice financing product at any one time.
The Company manages credit risk exposure by limiting total credit for each spending business using the BILL Divvy Card product and borrowers using the invoice financing product. The Company periodically reviews credit lines to assess different factors, including account usage and creditworthiness of spending businesses using BILL Divvy Card product and borrowers using the invoice financing product. The credit lines can be terminated by the Company at any time, and they do not necessarily represent future cash requirements. The Company does not record a liability for expected credit losses for unused lines of credit as they are unconditionally cancellable.
Commitments
During the three months ended September 30, 2026, there have been no material changes to the Company's contractual obligations or non-cancelable operating leases from those disclosed in Note 14 to the financial statements in the 2026 10-K.
Litigation
From time to time, the Company is involved in lawsuits, claims, investigations, and proceedings that arise in the ordinary course of business. The Company records a provision for a liability when management believes that it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. As of each of September 30, 2026 and June 30, 2026, the Company’s reserve for litigation is immaterial. The Company reviews these provisions periodically and adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Litigation is inherently unpredictable.
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NOTE 12 – RESTRUCTURING
The Company is committed to undertaking measures to improve organizational agility and efficiency, while also seeking to drive greater profitability. In May 2026, the Company announced a reduction in force impacting 30 % of the Company's workforce, which was substantially completed as of September 30, 2026.
In August 2026, the Company announced its decision to transition to a remote-first company and reduce its real property footprint. During the three months ended September 30, 2026, in connection with this transition, the Company exited a portion of its leased office spaces, which it intends to sublease, and reassessed the related operating lease ROU assets and property and equipment for recoverability. As of the measurement date of September 30, 2026, the Company determined that the carrying amount of the asset exceeded its estimated fair value and recorded a non-cash impairment charge of $25.8 million for operating lease ROU assets and property and equipment, which is included in restructuring in the accompanying condensed consolidated statements of operations.
The Company continues to consider actions to improve structural efficiencies and optimize operations in future periods.
The following table summarizes the restructuring liability that is included in other accruals and current liabilities, and accounts payable on the accompanying condensed consolidated balance sheets as of September 30, 2026:
| Severance and termination benefits | Other | Total restructuring liability | |||||||||||||||
| Balance, at June 30, 2026 | $ | $ | $ | ||||||||||||||
| Adjustments | ( | ( | |||||||||||||||
| Cash payments | ( | ( | ( | ||||||||||||||
| Balance, at September 30, 2026 | $ | $ | $ | ||||||||||||||
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NOTE 13 – NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
The following table presents the calculation of basic and diluted net income (loss) per share attributable to common stockholders (in thousands, except per share amounts):
| Three Months Ended September 30, | |||||||||||||||||||||||
2026 (1) | 2025 | ||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | |||||||||||||||||||||||
| Basic | $ | $ | ( | ||||||||||||||||||||
| Amortization of debt issuance costs | |||||||||||||||||||||||
| Diluted | $ | $ | ( | ||||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average shares used to compute net income (loss) per share attributable to common stockholders | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Convertible senior notes | |||||||||||||||||||||||
| Equity awards | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Net income (loss) per share attributable to common stockholders | |||||||||||||||||||||||
| Basic | $ | $ | ( | ||||||||||||||||||||
| Diluted | $ | $ | ( | ||||||||||||||||||||
(1) For the three months ended September 30, 2026, the dilutive effect of outstanding equity awards is reflected in diluted earnings per share by application of the treasury stock method and if-converted method.
Potentially dilutive securities, which were excluded from the diluted net income (loss) per share calculations because they would have been antidilutive were as follows (in thousands):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Equity awards | |||||||||||||||||||||||
| Convertible senior notes | |||||||||||||||||||||||
| Total | |||||||||||||||||||||||
Shares issuable under the Notes are subject to adjustment up to approximately 16.3 million shares if certain corporate events occur prior to the maturity date of the Notes or if the Company issues a notice of redemption. As of September 30, 2026, no conversion was triggered for the Notes.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this Quarterly Report on Form 10-Q includes forward-looking statements that involve risks and uncertainties. You should read the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our fiscal year end is June 30, and our fiscal quarters end on September 30, December 31, and March 31.
Overview
BILL is the intelligent finance platform trusted by nearly half a million businesses and their accountants to manage, move, and maximize their money. BILL powers businesses ranging from fast-moving startups to growing companies with complex operations. We use artificial intelligence (AI) to deliver strategic finance capabilities in one integrated platform that includes accounts payable (AP), accounts receivable (AR), expenses, forecasting, procurement, and more. With more than 9 million network members, our platform's total payment volume represents over 1% of U.S. gross domestic product. Headquartered in San Jose, California, BILL is a trusted partner of leading U.S. financial institutions, accounting firms, and software providers.
Our platform creates seamless connections between our customers, their suppliers, and their clients. Businesses on our platform generate and process invoices, streamline approvals, make and receive payments, manage employee expenses, sync with their accounting system, foster collaboration, and manage their cash flow. We have built sophisticated integrations with popular software solutions, banks, card issuers, and payment processors, enabling our customers to access these mission-critical services quickly and easily. Our integrated platform also includes BILL Spend and Expense, our spend and expense management product, which provides a solution for businesses to have charge cards, build and monitor budgets, manage payments, and eliminate the need for manual expense reports.
We efficiently reach small and midsized businesses (SMBs) through our proven direct and indirect go-to-market strategies. We acquire new businesses to use our solutions directly through digital marketing and inside sales, and indirectly through accounting firms, financial institution partnerships, and software providers. As of September 30, 2026, our partners included some of the most trusted brands in the financial services business, and more than 85 of the top 100 accounting firms. As we add customers and partners, we expect our network to continue to grow organically.
In fiscal 2026, we launched BILL AI, including our first suite of AI agents, which are designed to simplify and accelerate SMB workflows, including W-9 filings, customer support and assistance, touchless transactions, automatic reconciliations and complex invoice coding. We recently announced an expanded suite of AI features, including new risk intelligence, a consolidated control hub, AI-assisted onboarding, an external MCP connector, a smarter inbox, and BILL inside Claude connector marketplace. A newly announced collaboration with Visa and Billtrust marks the debut of the first live pilot empowering AI agents to execute approved buyer invoice payments through supplier portals from start to finish. Furthermore, our newly announced embed partnership with Blackbaud expands upon prior partnerships with Paychex, Oracle NetSuite, and Acumatica — all under our "Embed 2.0" initiative, which aims to deliver our platform capabilities as embeddable solutions through third-party platforms. We expect this approach will extend our platform's reach and offer new payment capabilities to our partners' users.
We have grown significantly and scaled our business operations in recent periods. Our revenue was $353.8 million and $314.5 million during the three months ended September 30, 2026 and 2025, respectively, representing an increase of $39.3 million. We generated net income of $60.3 million compared to a net loss of $3.0 million during the three months ended September 30, 2026 and 2025, respectively.
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Macroeconomic and Other Factors
Current macroeconomic conditions and uncertainties, including volatility in interest rates and borrowing costs, inflation, changes in currency exchange rates (including changes in the value of the U.S. dollar), the impact of the ongoing rapid development and adoption of new AI capabilities, ongoing geopolitical conflicts and related supply chain disruptions, increases in the cost of memory, computing power, and related raw materials, and recent changes in international trading relationships and U.S. and foreign tariff rates have impacted and could continue to impact our business and the SMBs we serve. SMBs are particularly susceptible to changes in overall economic and financial conditions, and certain SMBs may, in the event of adverse economic conditions a recession or increased borrowing costs, moderate their expenditures, shift to lower-cost methods of payment, or cease operations entirely. The interest income we generate on funds held for customers is subject to the effects of interest rate volatility. We intend to continue to monitor macroeconomic conditions closely and to take appropriate financial or operational actions in response to such conditions.
We are committed to undertaking measures to improve organizational agility and efficiency, while also seeking to drive greater profitability. In May 2026, we announced a reduction in force (RIF) impacting 30% of our workforce, which was substantially completed as of September 30, 2026. In August 2026, we announced our decision to transition to a remote-first company and reduce our real property footprint. As of September 30, 2026, we exited a portion of our leased office spaces, which we intend to sublease, and recognized a non-cash impairment charge on operating lease right-of-use (ROU) assets and property and equipment. Refer to Note 12 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Any of the conditions and uncertainties described above may have a negative impact on our future results of operations, liquidity, and financial condition. We are unable to predict the full impact that macroeconomic factors, actual or perceived instability in the U.S. and global banking systems, or ongoing global geopolitical conflicts will have on our future results of operations, liquidity, and financial condition due to numerous uncertainties, including economic downturns or recessions, government budget cuts and government shutdowns, tariffs and other changes in trade policy, changes in central bank policies and interest rates, rates of inflation, changes in the value of the U.S. dollar, the related impact to our customers, spending businesses, subscribers, partners, and suppliers, and other factors described in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.
Our Revenue Model
We generate revenue primarily from subscription and transaction fees.
Our subscription revenue is primarily based on a fixed monthly or annual rate per user or per customer account. Our transaction revenue consists of transaction fees, on a fixed or variable rate per transaction, and interchange fees. Transactions primarily include card payments, real-time payments, check payments, ACH payments, cross-border payments, pay-by-card, invoice financing, and creation of invoices. Much of our revenue comes from repeat transactions, which are an important contributor to our recurring revenue.
In addition, we generate revenue from interest on funds held for customers. When we process payment transactions, the funds flow through our bank accounts, resulting in a balance of funds held for customers. The balances may fluctuate based on volume and the type of payments processed. Interest is earned from interest-bearing deposit accounts, certificates of deposit, money market funds, corporate bonds, asset-backed securities, municipal bonds, commercial paper, U.S. treasury securities, and U.S. agency securities. We hold these funds from the day they are withdrawn from a payer’s account to the day the funds are credited to the receiver. This revenue can fluctuate depending on the amount of customer funds held, as well as our yield on customer funds invested, which is influenced by market interest rates and our investments.
Our Receivables Purchases and Servicing Model
We market our BILL Spend and Expense software and BILL Divvy Card, a charge card for business credit and expense management, to potential spending businesses and issue business-purpose charge cards through our card issuing partner banks (Issuing Banks). When a business applies for a BILL Divvy Card, we utilize, on behalf of the Issuing Bank, proprietary risk management capabilities to confirm the identity of the
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business, and perform a credit underwriting process to determine if the business is eligible for a BILL Divvy Card pursuant to our credit policies. Once approved for a BILL Divvy Card, the spending business is provided a credit limit and can use the BILL Spend and Expense software to request virtual cards or physical cards, establish budgets, and manage spend.
The cards on our platform are issued by Cross River Bank, a Federal Deposit Insurance Corporation (FDIC)-insured New Jersey state chartered bank, and WEX Bank and WebBank, FDIC-insured Utah state chartered banks. Under our arrangements with the Issuing Banks, we must comply with their respective credit policies and underwriting procedures, and the Issuing Banks maintain ultimate authority to decide whether to issue a card or approve a transaction. We are responsible for all fraud and unauthorized use of a card and generally are required to hold the Issuing Bank harmless from such losses unless claims regarding fraud or unauthorized use are due to the sole gross negligence of the Issuing Bank.
When a spending business completes a purchase transaction, the payment to the supplier is made by the cards' Issuing Bank. Obligations incurred by the spending business in connection with their purchase transaction are reflected as receivables on the Issuing Bank's balance sheets from the BILL Divvy Card account for the spending business. The Issuing Bank then sells a 100% participation interest in the receivable to us. Pursuant to our agreements with the Issuing Banks, we are obligated to purchase the participation interests in all of the receivables originated through our platform, and our obligations are secured by cash deposits. When we purchase the participation interests, the purchase price is equal to the outstanding principal balance of the receivable.
In order to ensure we have the operational flexibility and liquidity to purchase the participation rights in the receivables, we maintain certain funding arrangements, including warehouse facilities. We typically fund some portion of these participation interest purchases by borrowing under our credit facilities, although most purchases are funded using corporate cash.
Key Business Metrics
We regularly review several metrics, including the key business metrics presented in the table below, to measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. We periodically review and revise these metrics to reflect changes in our business.
We present our key business metrics on a consolidated basis, which we believe better reflects the performance of our consolidated business overall. Our key business metrics are defined following the table below and track our BILL AP/AR, BILL Spend and Expense, and Embedded Solutions and Other combined (as further defined below). The relevant metrics for each of BILL AP/AR, BILL Spend and Expense, and Embedded Solutions and Other are set forth in the footnotes to the table. The calculation of the key business metrics and other measures discussed below may differ from other similarly-titled metrics used by other companies, securities analysts, or investors.
| As of September 30, | |||||||||||||||||
| 2026 | 2025 | % Growth | |||||||||||||||
Businesses using our solutions (1) | 475,300 | 498,500 | (5) | % | |||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Growth | |||||||||||||||||||||||||||||||||
Total Payment Volume (billions) (2) | $ | 101.8 | $ | 89.3 | 14 | % | |||||||||||||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Growth | |||||||||||||||||||||||||||||||||
Transactions processed (millions) (3) | 38.0 | 33.3 | 14 | % | |||||||||||||||||||||||||||||||
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(1)As of September 30, 2026, the total number of BILL AP/AR customers was approximately 186,300; the total number of spending businesses that used our BILL Spend and Expense solution was approximately 47,100; and the total number of Embedded Solutions and Other customers was approximately 241,900.
(2)During the three months ended September 30, 2026, the Total Payment Volume (TPV) by BILL AP/AR customers was approximately $85.0 billion; the total card payment volume transacted by spending businesses that used BILL Divvy Cards was approximately $6.9 billion; and the TPV transacted by Embedded Solutions and Other customers was approximately $9.9 billion.
(3)During the three months ended September 30, 2026, the total number of transactions executed by BILL AP/AR customers was approximately 12.9 million; the total number of transactions executed by spending businesses that used BILL Divvy Cards was approximately 22.3 million; and the total number of transactions executed by Embedded Solutions and Other customers was approximately 2.8 million.
Businesses Using Our Solutions
We define businesses using our solutions as the summation of: (A) businesses that use our core BILL accounts payable and receivable platform (BILL AP/AR), (B) spending businesses that use our BILL Spend and Expense product, and (C) businesses that access our solutions through our embedded partners' platforms and other indirect sales channels (including our financial institution partners), and Invoice2go subscribers (Embedded Solutions and Other). Businesses using more than one of our solutions are included separately in the total for each solution utilized; as of June 30, 2026, this included approximately 21,400 businesses. Businesses using our solutions during a trial period are not counted as new businesses using our solutions during that period. If an organization has multiple entities billed separately for the use of our solutions, each entity is counted as a business using our solutions. Businesses using our solutions exclude certain network members utilizing limited features of our platform, such as those that only receive payments. The number of businesses using our solutions in the table above represents the total number of businesses using our solutions at the end of each fiscal quarter.
Total Payment Volume
To grow revenue from businesses using our solutions, we must deliver a product experience that helps them automate their back-office financial operations. The more they use and rely upon our product offerings to automate their operations, the more transactions they process on our platform. This metric provides an important indication of the aggregate value of transactions that businesses using our solutions are completing on our platform and is an indicator of our ability to generate revenue from businesses using our solutions. We define TPV as the total value of transactions that we process on our platform during a particular period, comprising transactions from BILL AP/AR customers, BILL Divvy Card transactions, and transactions executed by Embedded Solutions and Other customers. Our calculation of TPV is presented gross of payments that may be subsequently reversed. Such reversals accounted for less than 2% of TPV during each of the three months ended September 30, 2026 and 2025.
Transactions Processed
We define transactions processed as the total number of payments initiated and processed through our platform during a particular period. Payment transactions include checks, ACH payments, card payments, Invoice2go subscriber transactions, real-time payments, pay by card, invoice financing, and cross-border payments.
Components of Results of Operations
Revenue
We generate revenue primarily from subscription and transaction fees.
Subscription fees are fixed at a monthly or annual rate per user or per customer account for the use of our platform to process transactions. Transaction fees are fees collected for each transaction processed, on
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either a fixed or variable fee basis. Transaction fees primarily include processing of payments in the form of checks, ACH, card payments, real-time payments, pay by card, invoice financing, cross-border payments, and the creation of invoices. Transaction fees also include interchange fees paid by suppliers accepting card payments. Fixed transaction fees are set at a fixed charge per payment transaction, while variable transaction fees are generally calculated based on a percentage of the dollar amount of the payment transaction.
Our contracts with SMB and accounting firm customers provide them with access to the functionality of our cloud-based payments platform to process transactions. These contracts are either monthly contracts paid in arrears or upfront, or annual arrangements paid up front. We charge our SMB and accounting firm customers subscription fees to access our platform either based on the number of users or per customer account and the level of service. We generally also charge these customers transaction fees based on transaction volume and the category of transaction. The contractual price for subscription and transaction services is based on either negotiated fees or the rates published on our website. Revenue recognized excludes amounts collected on behalf of third parties, such as sales taxes collected and remitted to governmental authorities.
We enable our SMB and accounting firm customers to make virtual card payments to their suppliers. We also facilitate the extension of credit to spending businesses through the BILL Spend and Expense product in the form of BILL Divvy Cards. The spending businesses utilize the credit on BILL Divvy Cards as a means of payment for goods and services provided by their suppliers. Virtual card payments and BILL Divvy Cards are originated through agreements with the Issuing Banks. Our agreements with the Issuing Banks allow for card transactions on the Mastercard and Visa networks. For each virtual card and BILL Divvy Card transaction, suppliers are required to pay interchange fees to the issuer of the card. Based on our agreements with the Issuing Banks, we recognize the interchange fees as revenue gross or net of fees paid to the Issuing Banks based on our determination of whether we are the principal or the agent under the agreements.
We offer a rewards program to spending businesses using our card products. Rewards are earned based on transaction volume and are recorded as a reduction of interchange revenue within subscription and transaction fees.
We also enter into multi-year contracts with financial institution customers to provide them with access to our cloud-based payments platform. These contracts typically include fees for initial implementation services that are paid during the period the implementation services are provided as well as fees for subscription and transaction processing services, which are subject to guaranteed minimum fees that are paid over the contract term. These contracts enable the financial institutions to provide their customers with access to online bill pay services through the financial institutions’ online platforms. Implementation services are required up-front to establish an infrastructure that allows the financial institutions’ online platforms to communicate with our online platform. A financial institution’s customers cannot access online bill pay services until implementation is complete. The total consideration in these contracts varies based on the number of users and transactions to be processed.
In addition, we generate revenue from interest on funds held for customers. Interest on funds held for customers consists of the interest that we earn from customer funds while payment transactions are clearing. Interest is earned from interest-bearing deposit accounts, certificates of deposit, money market funds, corporate bonds, asset-backed securities, municipal bonds, commercial paper, U.S. treasury securities, and U.S. agency securities, until those payments are cleared and credited to the intended recipient.
Service Costs and Expenses
Service costs – Service costs consist primarily of costs that are directly attributed to processing customers’ and spending businesses' transactions (such as the cost of printing checks, postage for mailing checks, fees associated with the issuance and processing of card transactions, net of card network incentives, and fees for processing payments), personnel-related costs, including stock-based compensation expenses, for our customer success and payment operations teams, outsourced support services for our customer success team, direct and amortized costs for implementing and integrating our cloud-based platform with our customers’ systems, and cloud payments infrastructure costs. We expect that service costs will increase in absolute dollars, but may fluctuate as a percentage of revenue from period to period, as we continue to invest in growing our business and based on whether or not we are the principal or the agent under arrangements with third parties.
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Research and development (R&D) – R&D expenses consist primarily of personnel-related expenses, including stock-based compensation expenses, for our R&D teams, incurred in developing new products or enhancing existing products, and allocated overhead costs. We expense a substantial portion of R&D expenses as incurred. We believe that delivering new and enhanced functionality is critical to attract new customers and expand our relationship with existing customers. We expect to continue to make investments in and expand our offerings to enhance our customers’ experience and satisfaction, and to attract new customers. We expect our R&D expenses to increase in absolute dollars, but they may fluctuate as a percentage of revenue from period to period as we expand our R&D team to develop new products and product enhancements, including continued investments in our AI tools and offerings, such as AI agents. We capitalize certain internal-use software development costs that are attributable to developing new products and adding incremental functionality to our platform and amortize such costs into service costs over the estimated life of the new product or incremental functionality, which is generally three years.
Sales and marketing – Sales and marketing expenses consist primarily of personnel-related expenses, including stock-based compensation expenses, for our sales and marketing teams, sales commissions, marketing program expenses, travel-related expenses, and costs to market and promote our platform through advertisements, marketing events, partnership arrangements, direct customer acquisition, and allocated overhead costs. Sales commissions that are incremental to obtaining new customer contracts are deferred and amortized ratably over the estimated period of our relationship with new customers.
We focus our sales and marketing efforts on generating awareness of our company, platform, and products, creating sales leads, and establishing and promoting our brand. We plan to continue investing in sales and marketing efforts by driving our go-to-market strategies, building our brand awareness, and sponsoring additional marketing events; however, we will adjust our sales and marketing spend level as needed, as the spend may fluctuate from period to period, in response to changes in the economic environment.
General and administrative – General and administrative expenses consist primarily of personnel-related expenses, including stock-based compensation expenses, for finance, corporate business operations, risk management, legal and compliance, human resources, and information technology functions, costs incurred for external professional services, losses from fraud, and allocated overhead costs. We expect to incur additional general and administrative expenses as we explore various growth initiatives, which include incurring higher costs for professional services. We also expect to increase the size of our general and administrative functions to support the growth in our business. As a result, we expect that our general and administrative expenses will increase in absolute dollars but may fluctuate as a percentage of revenue from period to period.
Provision for expected credit losses – Provision for expected credit losses represents the amount of expense required to maintain the allowance for expected credit losses on our condensed consolidated balance sheets, which represents management’s estimate of expected credit losses. In the event that our receivables outperform expectation and/or we reduce our expectation of credit losses in future periods, we may release reserves and thereby reduce the provision for expected credit losses. The provision is determined based on our estimate of expected credit losses on acquired card receivables, loans held for investment and accounts receivable on our balance sheets, changes in our estimate of expected credit losses on receivables outstanding and loans held for investment as of the end of the period and the net charge-offs incurred in the period.
Depreciation and amortization – Depreciation and amortization consists of depreciation and amortization of property and equipment, and amortization of acquired intangibles, such as developed technology, and customer relationships. Amortization of capitalized internal-use software costs paid in cash is excluded.
Restructuring – Restructuring costs consist primarily of employee severance and other employment termination benefits related to the RIFs, and non-cash impairment charges related to operating lease ROU assets and property and equipment associated with office space we exited and intend to sublease. Additionally, these costs include other costs related to the execution of our efforts to improve organizational agility and efficiency, while also seeking to drive greater profitability. Refer to Note 12 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Other income, net – Other income, net consists primarily of interest income on our corporate funds, gain on debt extinguishment and interest expense on our borrowings (including amortization of debt discount and issuance costs).
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Provision for income taxes – Income tax expense consists of U.S. federal, state and foreign income taxes. We maintain a full valuation allowance against our U.S. federal and state net deferred tax assets as we have concluded that it is more likely than not that we will not realize our net deferred tax assets.
Results of Operations
The following table sets forth our results of operations together with the dollar and percentage change for the periods presented (amounts in thousands):
| Three Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||||||||||||||
Subscription and transaction fees (1)(2) | $ | 316,388 | $ | 276,714 | $ | 39,674 | 14 | % | |||||||||||||||||||||||||||||||||||||||
| Interest on funds held for customers | 37,386 | 37,736 | (350) | (1) | % | ||||||||||||||||||||||||||||||||||||||||||
Total revenue (2) | 353,774 | 314,450 | 39,324 | 13 | % | ||||||||||||||||||||||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||||||||||||||||||||||||||
Service costs (1) | 68,950 | 66,066 | 2,884 | 4 | % | ||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization (3) | 12,703 | 10,937 | 1,766 | 16 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total cost of revenue | 81,653 | 77,003 | 4,650 | 6 | % | ||||||||||||||||||||||||||||||||||||||||||
Gross profit (2) | 272,121 | 237,447 | 34,674 | 15 | % | ||||||||||||||||||||||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||||||||||||||||||||
Research and development (1) | 50,519 | 80,289 | (29,770) | (37) | % | ||||||||||||||||||||||||||||||||||||||||||
Sales and marketing (1)(2) | 57,980 | 67,925 | (9,945) | (15) | % | ||||||||||||||||||||||||||||||||||||||||||
General and administrative (1) | 65,281 | 76,919 | (11,638) | (15) | % | ||||||||||||||||||||||||||||||||||||||||||
| Provision for expected credit losses | 14,540 | 16,096 | (1,556) | (10) | % | ||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization (3) | 8,271 | 8,067 | 204 | 3 | % | ||||||||||||||||||||||||||||||||||||||||||
Restructuring (1) | 24,372 | 8,870 | 15,502 | 175 | % | ||||||||||||||||||||||||||||||||||||||||||
Total operating expenses (2) | 220,963 | 258,166 | (37,203) | (14) | % | ||||||||||||||||||||||||||||||||||||||||||
| Income (loss) from operations | 51,158 | (20,719) | 71,877 | (347) | % | ||||||||||||||||||||||||||||||||||||||||||
| Other income, net | 10,335 | 17,906 | (7,571) | (42) | % | ||||||||||||||||||||||||||||||||||||||||||
| Income (loss) before provision for income taxes | 61,493 | (2,813) | 64,306 | (2,286) | % | ||||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 1,240 | 149 | 1,091 | 732 | % | ||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 60,253 | $ | (2,962) | $ | 63,215 | (2,134) | % | |||||||||||||||||||||||||||||||||||||||
(1) Includes stock-based compensation charged to revenue and expenses as follows (amounts in thousands):
| Three Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||||||
| Revenue - subscription and transaction fees | $ | 655 | $ | 609 | $ | 46 | 8 | % | |||||||||||||||||||||||||||||||||||||||
| Cost of revenue - service costs | 2,026 | 2,345 | (319) | (14) | % | ||||||||||||||||||||||||||||||||||||||||||
| Research and development | 14,642 | 25,900 | (11,258) | (43) | % | ||||||||||||||||||||||||||||||||||||||||||
Sales and marketing | 5,618 | 9,626 | (4,008) | (42) | % | ||||||||||||||||||||||||||||||||||||||||||
| General and administrative | 16,946 | 20,325 | (3,379) | (17) | % | ||||||||||||||||||||||||||||||||||||||||||
| Restructuring | 840 | — | 840 | 100 | % | ||||||||||||||||||||||||||||||||||||||||||
Total stock-based compensation | $ | 40,727 | $ | 58,805 | $ | (18,078) | (31) | % | |||||||||||||||||||||||||||||||||||||||
(2) Prior period amounts have been retrospectively adjusted to reflect a change in accounting principle adopted in the first quarter of fiscal 2027 related to the presentation of rewards. Refer to Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
(3) Depreciation and amortization does not include amortization of capitalized internal-use software costs paid in cash of $10.5 million and $4.5 million during the three months ended September 30, 2026 and 2025, respectively, which are included in service costs and general and administrative in the condensed consolidated statements of operations.
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The following table sets forth the components of our condensed consolidated statements of operations for the periods presented as a percentage of revenue:
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
Subscription and transaction fees (1) | 89 | % | 88 | % | |||||||||||||||||||
| Interest on funds held for customers | 11 | % | 12 | % | |||||||||||||||||||
Total revenue (1) | 100 | % | 100 | % | |||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Service costs | 19 | % | 21 | % | |||||||||||||||||||
| Depreciation and amortization | 4 | % | 3 | % | |||||||||||||||||||
| Total cost of revenue | 23 | % | 24 | % | |||||||||||||||||||
Gross profit (1) | 77 | % | 76 | % | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Research and development | 14 | % | 26 | % | |||||||||||||||||||
Sales and marketing (1) | 16 | % | 22 | % | |||||||||||||||||||
| General and administrative | 19 | % | 24 | % | |||||||||||||||||||
| Provision for expected credit losses | 4 | % | 5 | % | |||||||||||||||||||
| Depreciation and amortization | 2 | % | 3 | % | |||||||||||||||||||
| Restructuring | 7 | % | 3 | % | |||||||||||||||||||
Total operating expenses (1) | 62 | % | 83 | % | |||||||||||||||||||
| Income (loss) from operations | 15 | % | (7) | % | |||||||||||||||||||
| Other income, net | 3 | % | 6 | % | |||||||||||||||||||
| Income (loss) before provision for income taxes | 18 | % | (1) | % | |||||||||||||||||||
| Provision for income taxes | 0 | % | 0 | % | |||||||||||||||||||
| Net income (loss) | 18 | % | (1) | % | |||||||||||||||||||
(1) Prior period amounts have been retrospectively adjusted to reflect a change in accounting principle adopted in the first quarter of fiscal 2027 related to the presentation of rewards. Refer to Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
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Comparison of the three months ended September 30, 2026 and 2025
Revenue
The following table sets forth our revenue during the three months ended September 30, 2026 and 2025, respectively (amounts in thousands):
| Three Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 (1) | Amount | % | ||||||||||||||||||||||||||||||||||||||||||||
| BILL AP/AR | $ | 62,688 | $ | 56,072 | $ | 6,616 | 12 | % | |||||||||||||||||||||||||||||||||||||||
| Embedded Solutions and Other | 14,622 | 14,760 | (138) | (1) | % | ||||||||||||||||||||||||||||||||||||||||||
| Subscription fees | 77,310 | 70,832 | 6,478 | 9 | % | ||||||||||||||||||||||||||||||||||||||||||
| BILL AP/AR | 137,701 | 122,524 | 15,177 | 12 | % | ||||||||||||||||||||||||||||||||||||||||||
| BILL Spend and Expense | 92,463 | 75,995 | 16,468 | 22 | % | ||||||||||||||||||||||||||||||||||||||||||
| Embedded Solutions and Other | 8,914 | 7,363 | 1,551 | 21 | % | ||||||||||||||||||||||||||||||||||||||||||
| Transaction fees | 239,078 | 205,882 | 33,196 | 16 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total subscription and transaction fees | 316,388 | 276,714 | 39,674 | 14 | % | ||||||||||||||||||||||||||||||||||||||||||
| Interest on funds held for customers | 37,386 | 37,736 | (350) | (1) | % | ||||||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 353,774 | $ | 314,450 | $ | 39,324 | 13 | % | |||||||||||||||||||||||||||||||||||||||
(1) Prior period amounts have been retrospectively adjusted to reflect a change in accounting principle adopted in the first quarter of fiscal 2027 related to the presentation of rewards. Refer to Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Total revenue increased by $39.3 million during the three months ended September 30, 2026 as compared to the prior year period, primarily due to:
•a $33.2 million increase in transaction fee revenue primarily due to increased total payment volume driven by the increase in customer adoption of our BILL AP/AR and BILL Spend and Expense products; and
•a $6.5 million increase in subscription fee revenue primarily due to an increase in BILL AP/AR customers as compared to the same prior year period.
Cost of Revenue, Gross Profit, and Gross Margin
Cost of revenue, gross profit, and gross margin during the three months ended September 30, 2026 and 2025, respectively, were as follows (amounts in thousands):
| Three Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Amount | % | ||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||||||||||||||||||||||||||
| Service costs | $ | 68,950 | $ | 66,066 | $ | 2,884 | 4 | % | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization (1) | 12,703 | 10,937 | 1,766 | 16 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total cost of revenue | 81,653 | 77,003 | 4,650 | 6 | % | ||||||||||||||||||||||||||||||||||||||||||
Gross profit (2) | $ | 272,121 | $ | 237,447 | $ | 34,674 | 15 | % | |||||||||||||||||||||||||||||||||||||||
Gross margin (2) | 76.9 | % | 75.5 | % | |||||||||||||||||||||||||||||||||||||||||||
(1) Consists of depreciation of property and equipment and amortization of developed technology, excluding amortization of capitalized internal-use software costs paid in cash of $9.3 million and $4.5 million during the three months ended September 30, 2026 and 2025, respectively, which are included in service costs.
(2) Prior period amounts have been retrospectively adjusted to reflect a change in accounting principle adopted in the first quarter of fiscal 2027 related to the presentation of rewards. Refer to Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
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Service costs increased by $2.9 million during the three months ended September 30, 2026 as compared to the prior year period, primarily due to:
•a $5.8 million increase in other costs primarily related to an increase in amortization of capitalized internal-use software costs; partially offset by
•a $3.2 million decrease in personnel-related costs, including stock-based compensation expense, primarily driven by our RIFs executed in the prior fiscal year.
Gross margin increased to 76.9% during the three months ended September 30, 2026 as compared to 75.5% for the prior year period primarily due to lower personnel-related costs, including stock-based compensation expense.
Research and Development Expenses
Research and development expenses decreased by $29.8 million during the three months ended September 30, 2026 as compared to the prior year period, primarily due to:
•a $32.3 million decrease in personnel-related expense, including stock-based compensation expense, primarily driven by our RIFs executed in the prior fiscal year; partially offset by
•a $1.4 million increase in consulting fees for outside services.
Sales and Marketing Expenses
Sales and marketing expenses decreased by $9.9 million during the three months ended September 30, 2026 as compared to the prior year period, primarily due to the following:
•a $13.5 million decrease in personnel-related expense, including stock-based compensation expense and sales commissions, driven by the decrease from our RIFs executed in the prior fiscal year; partially offset by
•a $3.5 million increase in advertising spend, marketing initiatives, and software subscription expenses.
General and Administrative Expenses
General and administrative expenses decreased by $11.6 million during the three months ended September 30, 2026 as compared to the prior year period, primarily due to the following:
•a $9.5 million decrease in personnel-related expense, including stock-based compensation expense, driven by our RIFs executed in the prior fiscal year; and
•a $2.8 million decrease in consulting fees for outside services, including fees related to shareholders' activism.
Provision for Expected Credit Losses
Provision for expected credit losses decreased by $1.6 million during the three months ended September 30, 2026 as compared to the prior year period. Provision for expected credit losses from acquired card receivables decreased by $1.9 million during the three months ended September 30, 2026, as compared to the prior year period, primarily due to improvements in delinquency performance, partially offset by portfolio growth.
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Depreciation and Amortization
Depreciation and amortization increased by $2.0 million during the three months ended September 30, 2026 as compared to the prior year period, primarily due to higher amortization of capitalized internal-use software costs during the period.
Restructuring
Restructuring increased by $15.5 million during the three months ended September 30, 2026 as compared to the prior year period, primarily due to a $25.8 million impairment charge on operating lease ROU assets and property and equipment, partially offset by $10.4 million in higher prior year period restructuring charges related to severance and other employment termination benefits in connection with the RIF. Refer to Note 12 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Other Income, Net
Other income, net decreased by $7.6 million during the three months ended September 30, 2026 as compared to the prior year period, primarily due to an $8.0 million decrease in interest income as a result of a lower average balance of corporate funds, and lower yields driven by the decrease in average interest rates throughout the quarter.
Provision for Income Taxes
Provision for income taxes increased by $1.1 million during the three months ended September 30, 2026 as compared to the prior year period, primarily due to an estimated cash tax liability and an increase in the net deferred tax liability.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different from similarly-titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP metrics to help investors understand our financial performance from management's perspective. We believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry. We also periodically review our non-GAAP financial measures and may revise these measures to reflect changes in our business or otherwise.
Non-GAAP Gross Profit and Non-GAAP Gross Margin
We define non-GAAP gross profit as gross profit adjusted for depreciation and amortization, and stock-based compensation and related payroll taxes charged to cost of revenue. Non-GAAP gross margin is defined as non-GAAP gross profit, divided by total revenue. We believe non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations. The following table shows a reconciliation of our non-GAAP gross profit and non-GAAP gross margin to our gross profit and gross margin for the periods presented (amounts in thousands):
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| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 (1) | ||||||||||||||||||||||
| Revenue | $ | 353,774 | $ | 314,450 | |||||||||||||||||||
| Gross profit | 272,121 | 237,447 | |||||||||||||||||||||
| Add: | |||||||||||||||||||||||
Depreciation and amortization (2) | 12,703 | 10,937 | |||||||||||||||||||||
| Stock-based compensation and related payroll taxes charged to cost of revenue | 2,082 | 2,405 | |||||||||||||||||||||
| Non-GAAP gross profit | $ | 286,906 | $ | 250,789 | |||||||||||||||||||
| Gross margin | 76.9 | % | 75.5 | % | |||||||||||||||||||
| Non-GAAP gross margin | 81.1 | % | 79.8 | % | |||||||||||||||||||
(1) Prior period amounts have been retrospectively adjusted to reflect a change in accounting principle adopted in the first quarter of fiscal 2027 related to the presentation of rewards. Refer to Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
(2) Consists of depreciation of property and equipment and amortization of developed technology that are revenue generating, excluding amortization of capitalized internal-use software costs paid in cash of $9.3 million and $4.5 million during the three months ended September 30, 2026 and 2025, respectively. These amounts are included in service costs in the condensed consolidated statements of operations.
Free Cash Flow
Free cash flow is a non-GAAP measure defined as net cash provided by operating activities, less purchases of property and equipment and capitalization of internal-use software costs. We believe free cash flow is an important liquidity measure of the cash that is generated, after incurring operating expenses, purchases of property and equipment and capitalization of internal-use software costs, for future operational expenses and investment in our business. Free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash in the ordinary course of business. One limitation of free cash flow is that it does not reflect our future contractual commitments. Additionally, free cash flow does not represent the total increase or decrease in our cash balance for a given period. Once our business needs and obligations are met, cash can be used to maintain strong balance sheets and invest in future growth. The following table provides a reconciliation of our free cash flow to net cash provided by operating activities for the periods presented (in thousands):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Net cash provided by operating activities | $ | 96,809 | $ | 96,855 | |||||||||||||||||||
| Purchases of property and equipment | (80) | (1,299) | |||||||||||||||||||||
| Capitalization of internal-use software costs | (13,836) | (13,294) | |||||||||||||||||||||
| Free cash flow | $ | 82,893 | $ | 82,262 | |||||||||||||||||||
Liquidity and Capital Resources
As of September 30, 2026, our principal sources of liquidity were our cash and cash equivalents of $915.5 million, our available-for-sale short-term investments of $678.1 million, and our available undrawn Revolving Credit Facilities (as defined below) of $270.0 million. Our cash equivalents are comprised primarily of money market funds, certificates of deposit, and investments in debt securities with original maturities of three months or less at the time of purchase. Our short-term investments are comprised primarily of available-for-sale investments in corporate bonds, certificates of deposit, asset-backed securities, municipal bonds, and U.S. treasury securities with original maturities of more than three months. Our corporate deposits held at large multinational financial institutions and U.S. national or regional banks, may at times exceed federally insured limits. We monitor the financial strength of the financial institutions with which we do business to ensure they are financially sound and present minimal credit risk. We further believe the associated risk of concentration for our investments is mitigated by holding a diversified portfolio of highly rated investments consisting of the money market funds and short-term debt securities described above. We have a total borrowing capacity of
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$600.0 million from our Revolving Credit Facilities, and have drawn $330.0 million under the Revolving Credit Facilities as of September 30, 2026. Our principal uses of cash are funding our operations and other working capital requirements, including the contractual and other obligations discussed below.
We believe that our cash, cash equivalents, and short-term investments will be sufficient to meet our working capital requirements for at least the next 12 months. In the future, we may attempt to raise additional capital through the sale of equity securities or through additional equity-linked or debt financing arrangements to fund future operations or obligations, including the repayment of outstanding convertible senior notes. We may also seek to raise additional capital from these offerings or financings on an opportunistic basis when we believe there are suitable opportunities for doing so. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted. If we raise additional financing by incurring additional indebtedness, we may be subject to increased fixed payment obligations and could also be subject to additional restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business. Any future indebtedness we incur may have terms that could be unfavorable to equity investors. There can be no assurances that we will be able to raise additional capital. The inability to raise capital would adversely affect our ability to achieve our business objectives.
As of September 30, 2026, our principal commitments to settle our contractual obligations consisted of our 2027 Notes, 2030 Notes (as defined below), and outstanding borrowings from our Revolving Credit Facilities as further discussed below. For additional discussion about our Notes and Revolving Credit Facilities, refer to Note 7 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. In addition, we have minimum commitments under our noncancellable operating lease agreements and agreements with certain vendors. There have been no material changes to our contractual obligations or litigation from those disclosed in Note 14 to the financial statements in our Annual Report on Form 10-K for the fiscal year ended June 30, 2026 (2026 10-K).
In August 2025, our board of directors authorized a share repurchase program pursuant to which we announced our intention to purchase up to $300.0 million of our outstanding shares of common stock (the August 2025 Share Repurchase Program).
In May 2026, we announced that our board of directors authorized the repurchase of up to $1.0 billion in shares of our outstanding common stock, which authorization includes unused amounts under the August 2025 Share Repurchase Program (the 2026 Share Repurchase Authorization). Pursuant to this authorization, we may repurchase such shares from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. This authorization has a term of 24 months, may be suspended, discontinued or modified at any time, and does not obligate us to acquire any amount of common stock.
For additional discussion about our share repurchase program activity during the period and shares available for future repurchases, refer to Note 8 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Depending on market conditions, our liquidity requirements, contractual restrictions, and other factors, we may consider initiating additional share repurchase programs or repurchasing additional Notes.
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Cash Flows
Below is a summary of our consolidated cash flows for the periods presented (in thousands):
| Three Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net cash provided by (used in): | |||||||||||
| Operating activities | $ | 96,809 | $ | 96,855 | |||||||
| Investing activities | $ | 142,396 | $ | (108,721) | |||||||
| Financing activities | $ | (550,744) | $ | 1,100 | |||||||
Net Cash Provided by Operating Activities
Our primary source of cash provided by our operating activities is our revenue from subscription and transaction fees. Our subscription revenue is primarily based on a fixed monthly or annual rate per user or per customer account. Our transaction revenue is comprised of transaction fees on a fixed or variable rate per type of transaction. We also generate cash from the interest earned on both corporate funds and funds held in trust on behalf of customers. Our primary uses of cash in our operating activities include payments for employees' salaries and related costs, payments to third parties to fulfill our payment transactions, payments to sales and marketing partners, payments for card rewards, and other general corporate expenditures.
Net cash provided by operating activities decreased to $96.8 million during the three months ended September 30, 2026, from $96.9 million during the prior year period. The net change was primarily driven by payments for severance and other employment termination benefits related to the RIF executed in the fourth quarter of the prior fiscal year partially offset by higher subscription and transaction revenue, and decreased operating expenditures.
Net Cash Provided by Investing Activities
Our cash usage for our investing activities consists primarily of purchases of corporate and customer fund available-for-sale investments, purchases of loans held for investment, and capitalization of internal-use software. Our cash proceeds from our investing activities consist primarily of proceeds from the maturities and sale of corporate and customer fund available-for-sale investments and repayments of loans held for investment. Additionally, the increase or decrease in our net cash from investing activities is impacted by the net change in acquired card receivables.
Our net cash provided by investing activities was $142.4 million during the three months ended September 30, 2026, compared to net cash used of $108.7 million during the prior year period. The net change was primarily due to the decrease in purchases of corporate and customer short-term investments, an increase in proceeds from maturities of corporate and customer short-term investments, partially offset by an increase in acquired card receivables and a net increase in cash used for loans held for investment.
Net Cash Used in Financing Activities
Our cash usage for our financing activities consists primarily of repurchases of shares of common stock. Additionally, the increase or decrease in our net cash from financing activities is impacted by the change in customer fund deposits liability and prepaid card deposits.
Our net cash used in financing activities was $550.7 million during the three months ended September 30, 2026, compared to net cash provided by financing activities of $1.1 million during the prior year period. The net change was primarily due to the increase in repurchase of shares of common stock, the absence of proceeds from line of credit borrowings, the decrease in customer fund deposits liability, and the net decrease in prepaid card deposits.
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2030 Notes
On December 6, 2024, we issued $1.4 billion in aggregate principal amount of our 0% convertible senior notes due on April 1, 2030 (the 2030 Notes). The 2030 Notes are senior, unsecured obligations, and will not accrue interest unless we determine to pay special interest, and are convertible on or after January 1, 2030 until the close of business on the second scheduled trading day immediately preceding the maturity date on April 1, 2030. The 2030 Notes are convertible by the holders at their option during any calendar quarter after December 31, 2024 under certain circumstances, including if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on and including the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the $119.45 per share initial conversion price. If the note holders exercise their right to convert, our current intent is to settle such conversion through a combination settlement involving a repayment of the principal portion in cash and the balance in shares of common stock. For additional discussion about the 2030 Notes and the capped call transactions, refer to Note 7 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
2027 Notes
On September 24, 2021, we issued $575.0 million in aggregate principal amount of our 0% convertible senior notes due on April 1, 2027 (the 2027 Notes). The 2027 Notes are senior, unsecured obligations, will not accrue interest unless we determine to pay special interest, and are convertible on or after January 1, 2027 until the close of business on the second scheduled trading day immediately preceding the maturity date on April 1, 2027. The 2027 Notes are convertible by the holders at their option during any calendar quarter after December 31, 2021 under certain circumstances, including if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on and including the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the $414.80 per share initial conversion price. If the note holders exercise their right to convert, our current intent is to settle such conversion through a combination settlement involving a repayment of the principal portion in cash and the balance in shares of common stock.
In December 2024, in connection with the issuance of our 2030 Notes, we entered into privately negotiated transactions with certain holders of our 2027 Notes to repurchase $451.5 million aggregate principal amount of our 2027 Notes for an aggregate cash repurchase price of $408.6 million, inclusive of transaction costs. Following the repurchases, we cancelled the repurchased 2027 Notes and, after such cancellation, $123.5 million aggregate principal amount of 2027 Notes remains outstanding. For additional discussion about our 2027 Notes and the capped call transactions, refer to Note 7 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Revolving Credit Facilities
2021 Credit Facility
We have a total borrowing capacity of $300.0 million pursuant to our Revolving Credit and Security Agreement, by and between our subsidiary, Divvy Peach, LLC, Goldman Sachs Bank USA and the lenders party thereto (as amended to date, the 2021 Credit Facility), of which we have borrowed $180.0 million as of September 30, 2026. Revolving loans under the 2021 Credit Facility bear interest at a rate per annum determined by reference to the applicable three-month secured overnight financing rate or a base rate, plus an applicable margin of 1.95% (subject to a floor rate of 0.25%). Obligations under the 2021 Credit Facility are secured by receivables generated by our BILL Divvy Card and certain related collateral, and subject to a limited guarantee by BILL Holdings, Inc. The 2021 Credit Facility matures in May 2028. We have amended our 2021 Credit Facility from time to time, most recently in October 2025, as further discussed under Note 7 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
2025 Credit Facility
We have a total borrowing capacity of $300.0 million pursuant to our Revolving Credit and Security Agreement, by and between our subsidiary, Odin Financing, LLC, JPMorgan Chase Bank, N.A. and the lenders party thereto (the 2025 Credit Facility, and together with the 2021 Credit Facility, the Revolving Credit Facilities),
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of which we have borrowed $150.0 million as of September 30, 2026. Revolving loans under the 2025 Credit Facility bear interest at a rate per annum determined by reference to the applicable one-month secured overnight financing rate or a base rate, plus an applicable margin of 1.80%. Obligations under the 2025 Credit Facility are secured by receivables generated by our BILL Divvy Card and certain related collateral, and subject to a limited guarantee by BILL Holdings, Inc. The 2025 Credit Facility matures in November 2027. For additional discussion about the 2025 Credit Facility, refer to Note 7 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Off-Balance Sheet Arrangements
We are contractually obligated to purchase all card receivables from U.S. based Issuing Banks including authorized transactions that have not cleared. The transactions that have been authorized but not cleared totaled $74.4 million as of September 30, 2026 and have not been recorded on our condensed consolidated balance sheets. We have off-balance sheet credit exposures with these authorized but not cleared transactions; however, our expected credit losses with respect to these transactions were not material as of September 30, 2026.
Other than our expected credit loss exposure on the card transactions that have not cleared, we had no other off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources as of September 30, 2026.
As of September 30, 2026 we, in partnership with the Issuing Banks and the Originating Bank Partner, had approximately $4.5 billion in unused credit available to spending businesses using BILL Divvy Card product and borrowers using our invoice financing product. While this balance represents the total unused credit available, historical trends and current expectations indicate that the unused credit will likely not be fully utilized by spending businesses using BILL Divvy Card product and borrowers using our invoice financing product at any one time.
Critical Accounting Estimates
Our condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenue generated, and reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Goodwill
We continually evaluate our current and estimated future financial results, macroeconomic environment and industry-specific conditions, which are subject to many uncertainties, including the impact of government budget cuts, government shutdowns and tariffs, volatility related to changes in rates of inflation, interest rates, and changes in the value of the U.S. dollar, geopolitical conflicts, and the potential for a slowing economy. These conditions, if sustained or exacerbated, could negatively impact the estimated fair value of our single reporting unit, and we may be required to perform a quantitative goodwill impairment test in a future period, which could result in a non-cash impairment charge.
Deferred Tax Valuation Allowance
Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss, capital loss, and tax credit carryforwards. We evaluate the realizability of our deferred tax assets on a quarterly basis to determine whether a valuation allowance is necessary and reduce such assets to the amount that is more likely than not to be realized. This
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evaluation requires significant judgment and involves the consideration of all available positive and negative evidence, primarily our profitability in future periods and ongoing prudent and feasible tax planning strategies.
Given our recent results and expected future results, sufficient positive evidence may exist in a future period to support the conclusion that all or a portion of the valuation allowance will no longer be required. The release would result in the recognition of material federal and state deferred tax assets and a corresponding decrease to income tax expense and the effective tax rate in the period the release is recorded. The timing and amount of the valuation allowance release could vary based on our assessment of all available evidence.
For more information, see “The Company and its Significant Accounting Policies” in Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and Note 1 to the financial statements in the 2026 10-K.
There have been no material changes to our critical accounting estimates as compared to the critical accounting estimates described in “Management's Discussion and Analysis of Financial Condition and Results of Operations” set forth in our 2026 10-K, except as noted below:
Valuation of Long-lived Assets
We assess the impairment of long-lived assets whenever events or changes in business circumstances indicate that the carrying amounts of the asset group may not be fully recoverable. We determine whether there has been an impairment by comparing the carrying value of the asset group to the anticipated undiscounted net cash flows associated with the asset. If such cash flows are less than the carrying value, we write down the asset to its fair value, which may be measured as anticipated discounted net cash flows associated with the asset. For more information, see The Company and its Significant Accounting Policies” in Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Recent Accounting Pronouncements
See “The Company and its Significant Accounting Policies” in Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our overall investment portfolio is comprised of corporate investments and funds held for customers. Our corporate investments are comprised of cash and cash equivalents and investment-grade fixed income marketable securities. These assets are available for corporate operating purposes with maturities of up to 37 months from the date of purchase based on the effective maturity date. The funds held for customers are invested with safety of principal as the primary objective. As secondary objectives, we seek to provide liquidity and diversification and maximize interest income. The funds held for customers are invested in money market funds that maintain a constant net asset value, other cash equivalents, and highly liquid, investment-grade fixed income marketable securities, with maturities of up to 37 months from the time of purchase based on the effective maturity date. Certain types of investments may have effective maturity dates different from contractual maturity dates. Our investment policy governs the types of investments we make. We classify all of our investments in marketable securities as available-for-sale.
As part of our customer funds investment strategy, we use funds collected daily from our customers to satisfy the obligations of other unrelated customers, rather than liquidating investments purchased with previously collected funds. There is risk that we may not be able to satisfy customer obligations in full or on time due to insufficient liquidity or due to a decline in value of our investments. However, the liquidity risk is minimized because we typically collect the customer’s funds in advance of the payment obligation and by maintaining certain investments in bank deposits and constant net asset value money market funds that allow for same-day liquidity. The risk of a decline in investment value is minimized by our restrictive investment policy allowing for only short-term, high quality fixed income marketable securities. We also maintain other sources of liquidity including our corporate cash balances.
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Interest Rate and Credit Risk
We are exposed to interest rate risk relating to our investments of corporate cash and funds held for customers that we process through our bank accounts. Our corporate investment portfolio consists principally of interest-bearing bank deposits, money market funds, certificates of deposit, commercial paper, other corporate notes, asset-backed securities, and U.S. treasury securities. Funds that we hold for customers are held in non-interest and interest-bearing bank deposits, money market funds, certificates of deposit, commercial paper, other corporate notes, and U.S. treasury securities. We recognize interest earned from funds held for customers as revenue.
Factors that influence the rate of interest we earn include the short-term market interest rate environment and the weighting of our balances by security type. The annualized interest rate earned on our corporate investment portfolio and funds held for customers decreased to 3.66% during the three months ended September 30, 2026, compared to 4.13% during the same period in fiscal 2026, primarily due to the changes in the short-term interest rate environment.
Unrealized gains or losses on our marketable debt securities are due primarily to interest rate fluctuations from the time the securities were purchased. We account for both fixed and variable rate securities at fair value with unrealized gains and losses recorded in other comprehensive income (loss) in our condensed consolidated statements of comprehensive income since we classify our marketable debt securities as available for sale. Our investments in marketable debt securities are generally held through maturity with sales before maturity barring unforeseen circumstances, and thus unrealized gains or losses on fixed-income securities from market interest rate decreases or increases are not realized as the securities mature at par.
We are also exposed to interest-rate risk relating to borrowings from our Revolving Credit Facilities. As of September 30, 2026, we borrowed $330.0 million from our Revolving Credit Facilities. Because the interest rate on each of our Revolving Credit Facilities is indexed to a designated term SOFR, which is a floating rate mechanism, our interest cost may increase if market interest rates rise. A hypothetical 0.5%-2.0% increase or decrease in interest rates would not have a material effect on our financial results.
In addition to interest rate risks, we also have exposure to risks associated with changes in laws and regulations that may affect customer fund balances. For example, a change in regulations that restricts the permissible investment alternatives for customer funds would reduce our interest earned revenue.
We are exposed to credit risk in connection with our investments in securities through the possible inability of the borrowers to meet the terms of the securities. We limit credit risk by investing in investment-grade securities as rated by Moody’s, Standard & Poor’s, or Fitch, by investing only in securities that mature in the near-term, and by limiting concentration in securities other than U.S. Treasuries. Investment in securities of issuers with short-term credit ratings must be rated A-2/P-2/F2 or higher. Investment in securities of issuers with long-term credit ratings must be rated A- or A3, or higher. Investment in asset-backed securities and money market funds must be rated AAA or equivalent. Investment in repurchase agreements will be at least 102 percent collateralized with securities issued by the U.S. government or its agencies. Securities in our corporate portfolio and securities held in our customer fund accounts may not mature beyond 37 months from purchase, based on the effective maturity date. No more than 5% of invested funds, either corporate or customer, may be held in the issues of a single corporation.
We are also exposed to credit risk related to the timing of payments made from customer funds collected. For certain transactions we remit customer funds to our customers’ suppliers in advance of having good or confirmed funds collected from our customers and if a customer disputes a transaction after we remit funds on their behalf, then we could suffer a credit loss. Furthermore, our customers generally have three days to dispute transactions, and if we remit funds in advance of receiving confirmation that no dispute was initiated by our customer, then we could suffer a credit loss. We mitigate this credit exposure by leveraging our data assets to make credit underwriting decisions about whether to accelerate disbursements, managing exposure limits, and various controls in our operating systems.
We continually evaluate the credit quality of the securities in our portfolios. If a security holding is downgraded below our credit rating threshold or we otherwise believe the security’s payment performance may
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be compromised, we will evaluate the relevant risks, remaining time to maturity, amount of principal, as well as other factors, and we will make a determination of whether to continue to hold the security or promptly sell it.
We are exposed to credit risk from card receivable balances we have with our spending businesses and loans held for investment balances from borrowers using our invoice financing product. Spending businesses and borrowers may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons. Although we regularly review our credit exposure to specific spending businesses and borrowers as well as to specific industries that we believe may present credit concerns, default risk may arise from events or circumstances that are difficult to foresee or detect, such as fraud. In addition, our ability to manage credit risk or collect amounts owed to us may be adversely affected by legal or regulatory changes (such as restrictions on collections or changes in bankruptcy laws, and minimum payment regulations). We rely principally on the creditworthiness of spending businesses for repayment of card receivables and therefore have limited recourse for collection. We rely principally on our ability to collect outstanding balances on loans held for investment by receiving payments processed through our platform from the borrowers' customers and applying them to outstanding loan balances. Our ability to assess creditworthiness may be impaired if the criteria or models we use to manage our credit risk prove inaccurate in predicting future losses, which could cause our losses to rise and have a negative impact on our results of operations. Any material increases in delinquencies and losses beyond our current estimates could have a material adverse impact on us. Although we make estimates to provide for expected credit losses in our outstanding portfolio of card receivables and loans held for investment, these estimates may differ from actual losses.
Foreign Currency Exchange Risk
We are exposed to foreign currency exchange risk relating to our cross-border payment service, which allows customers to pay their international suppliers in foreign currencies. When customers make a cross-border payment, customers fund those payments in U.S. dollars based upon an exchange rate that is quoted on the initiation date of the transaction. Subsequently, when we convert and remit those funds to our customers’ suppliers primarily through our global payment partners, the exchange rate may differ, due to foreign exchange fluctuation, from the exchange rate that was initially quoted. Our transaction fees to our customers are not adjusted for changes in foreign exchange rates between the initiation date of the transaction and the date the funds are converted.
We are also exposed to foreign currency exchange risk relating to the operations of our subsidiary in Canada. A change in foreign currency exchange rate can affect our financial results due to transaction gains or losses related to the remeasurement of certain monetary asset and monetary liability balances that are denominated in currencies other than the functional currency of our Canadian subsidiary, which is in U.S. dollars.
If the value of the U.S. dollar weakens relative to the foreign currencies, this may have an unfavorable effect on our cash flows and operating results. We believe that a 10% change in the relative value of the U.S. dollar to other foreign currencies would have an immaterial effect on our cash flows and operating results.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
Our management, with the participation and supervision of our chief executive officer (CEO) and our chief financial officer (CFO), have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of September 30, 2026, the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective at a reasonable assurance level.
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Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent limitation on the effectiveness of internal control
Our management, including our CEO and CFO, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be subject to legal proceedings and claims in the ordinary course of business, including patent, commercial, product liability, employment, class action, whistleblower, and other litigation and claims, as well as governmental and other regulatory investigations and proceedings. In addition, third parties may from time to time assert claims against us in the form of letters and other communications. We are not currently a party to any legal proceedings that we believe to be material to our business or financial condition.
The results of any future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our condensed consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q before deciding whether to invest in shares of our common stock. References to past events are provided by way of example only and are not intended to be a complete listing of such events or a representation as to whether or not such factors or similar events have occurred in the past or their likelihood of occurring in the future. Further, additional risks beyond those summarized below or discussed elsewhere in this Quarterly Report on Form 10-Q may apply to our activities or operations as currently conducted or as we may conduct them in the future or in the markets in which we operate or may in the future operate.
Summary of Risk Factors
Consistent with the foregoing, we are exposed to a variety of risks, including the following:
•We have a history of operating losses and may not sustain or expand our profitability in the future;
•A significant portion of our revenue comes from small and medium-sized businesses, which may have fewer financial resources to weather an economic downturn, and volatile or weakened economic conditions in the U.S. and globally may adversely affect our business and operating results;
•If we are unable to attract new customers or convert trial customers into paying customers or if our efforts to promote our charge card usage through marketing, promotion, and spending business rewards are unsuccessful, our revenue growth and operating results will be adversely affected;
•If we are unable to retain our current customers, increase customer adoption of our products, sell additional services to our customers, or develop and launch new payment products, our business and growth will be adversely affected;
•Our BILL Divvy Card offering exposes us to credit risk and other risks related to spending businesses' ability to pay the balances incurred on their BILL Divvy Cards. Certain of our other current and future product offerings, such as invoice financing, may also subject us to credit risk;
•Our risk management efforts may not be effective to prevent fraudulent activities by our customers, subscribers, spending businesses, or their counterparties, or other third parties which, potentially augmented by AI, could expose us to material financial losses and liabilities and otherwise harm our business;
•The markets in which we participate are competitive, and if we do not compete effectively, our operating results could be harmed;
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•We transfer large sums of customer funds daily, and are subject to numerous associated risks which could result in financial losses, damage to our reputation, or loss of trust in our brand, which would harm our business and financial results;
•Our business depends, in part, on our relationships with accounting firms, financial institutions, software providers and other partners;
•Our recent growth may not be indicative of our future growth, and there is no assurance that we will be able to scale our platform and infrastructure, and manage our growth effectively;
•We are subject to numerous risks related to partner banks and financing arrangements with respect to our spend and expense management solution;
•We use AI in our business, and any challenges with successfully developing and deploying new AI tools, properly managing the use of AI, or complying with emerging AI regulations could result in reputational harm, competitive harm, regulatory penalties and legal liability, and adversely affect our results of operations;
•Future acquisitions, strategic investments, partnerships, collaborations, or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our operating results and financial condition;
•A substantial portion of our revenue is derived from interchange fees, which exposes us to potential variability in income and other risks;
•Our reductions in force, transition to a remote-first company, and restructuring efforts may result in unanticipated costs or consequences;
•Our business could be negatively affected as a result of actions by or proposals from activist stockholders, and such activism could impact the trading value of our securities and harm our business, financial condition and results of operations;
•Payments and other financial services-related regulations and oversight are material to our business. Our failure to comply could materially harm our business;
•Our debt service obligations, including the Notes, may adversely affect our financial condition and results of operations;
•We may not have the ability to raise the funds necessary for cash settlement upon conversion of the Notes or to repurchase the Notes for cash upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion of the Notes or to repurchase the Notes; and
•The market for our common stock has been, and will likely continue to be, volatile and the market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control.
Risks Related to Our Business and Industry
We have a history of operating losses and may not sustain or expand our profitability in the future.
We were incorporated in 2006 and historically have experienced net losses in most periods since inception. We generated net income of $60.3 million and a net loss of $3.0 million during the three months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, we had an accumulated deficit of $2.3 billion. While we have experienced significant revenue growth in recent years and achieved profitability on a GAAP basis in certain recent quarters, we are not certain whether or when we will generate sufficient revenue to sustainably maintain or enhance our profitability profile in the future. Our costs and expenses may also increase in future periods, as a result of our investments in AI and other initiatives, which could negatively affect our future operating results if our revenue does not increase. In particular, we intend to continue to expend significant funds to further develop our platform, including introducing new products and functionality, drive new customer adoption, and expand partner integrations. Our profitability each quarter is also impacted by the mix of our revenue generated from subscriptions, transaction fees, including the mix of ad valorem transaction revenue, and interest earned on funds that we hold for the benefit of our customers. Any changes in this revenue mix will have the effect of increasing or decreasing our margins. In addition, we offer promotion
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programs whereby spending businesses that use our spend and expense management product can earn rewards based on transaction volume on our BILL Divvy Cards, and the cost of earned rewards reduces our revenue. Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses. We may incur significant losses in the future for several reasons, including the other risks described herein, and unforeseen expenses, difficulties, complications, delays, and other unknown events. If we are unable to sustain and expand our profitability, the value of our business and common stock may significantly decrease.
A significant portion of our revenue comes from small and medium-sized businesses, which may have fewer financial resources to weather an economic downturn, and volatile or weakened economic conditions in the U.S. and globally may adversely affect our business and operating results.
Our overall performance depends in part on U.S. and international macroeconomic conditions and a significant portion of our revenue comes from small and medium businesses (SMBs). These customers tend to be more susceptible to negative impacts from economic downturns, recession, inflation, increases in interest rates or the cost of borrowing, changes in foreign currency exchange rates, including recent weakness in the U.S. dollar, the impact of the ongoing rapid development and adoption of new AI capabilities, ongoing geopolitical conflicts and related supply chain disruptions, increases in the cost of memory, computing power, and related raw materials, newly-imposed tariffs by the U.S. and foreign countries and other restrictions on international trade, financial market conditions, actual or perceived instability in the U.S. and global banking systems, increased fuel prices, and catastrophic events than larger, more established businesses, as SMBs typically have more limited financial resources than larger entities. In recent periods, we have observed SMBs reacting to the macroeconomic environment by tightening budgets and selecting lower-cost payment methods, which adversely impacted our operating results. In addition, the rate of growth in the number of businesses using our solutions has been and may continue to be impacted by current macroeconomic conditions. Finally, recent reductions in U.S. federal government spending, including in the U.S. Small Business Administration, may adversely impact the SMBs we serve.
More broadly, the U.S. and other key international economies have experienced and may in the future experience significant economic and market changes and downturns in which economic activity is impacted by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity, and foreign exchange markets, inflation, bankruptcies, new or increased trade barriers, and overall uncertainty with respect to the economy. These economic conditions can arise suddenly and the full impact of such conditions are impossible to predict. In addition, geopolitical and domestic political developments, such as certain ongoing geopolitical conflicts, changes in government spending levels, government shutdowns and changes in immigration policy impacting the availability of qualified employees for the SMBs we serve, can increase levels of political and economic unpredictability globally and increase the volatility of global financial markets. Moreover, we may be impacted by any turmoil in the global banking system. For example, in March 2023, Silicon Valley Bank (SVB) was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. First-Citizens Bank & Trust Company then assumed all of SVB’s customer deposits and certain other liabilities and acquired substantially all of SVB’s loans and certain other assets from the FDIC. While the closure of SVB did not have a material direct impact on our business, instability (either actual or perceived) in the global banking system may result in additional bank failures, as well as volatility of global financial markets, either of which may adversely impact our business and financial condition. If challenging macroeconomic conditions for SMBs persist, or if additional economic or political factors create greater pressure on SMBs, our customers and spending businesses may be disproportionately impacted and, as a result, the overall demand for our products and services could be materially and adversely affected.
We expect fluctuations in our financial results, making it difficult to project future results, and if we fail to meet the expectations of securities analysts or investors with respect to our operating results, our stock price and the value of your investment could decline.
Our operating results have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our control. As a result, our past results may not be indicative of our future performance. In addition to the other risks described herein, factors that may affect our operating results include the following:
•fluctuations in demand for, or pricing of our platform;
•our ability to attract new customers;
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•our ability to retain and expand utilization by our existing customers;
•our ability to retain and expand our relationships with our accounting firm partners, financial institution partners and software partners, or to identify and attract new partners;
•our ability to build and deploy AI-powered solutions and drive customer adoption of such solutions, as well as the amount and timing of the associated research and development expenses;
•changes in customer preference for cloud-based services as a result of security breaches in the industry or privacy concerns, or other security or reliability concerns regarding our products;
•fluctuations or delays in purchasing decisions in anticipation of new products or product enhancements by us or our competitors;
•general economic, market, credit and liquidity conditions, both domestically and internationally, such as inflation, high interest rate and recessionary environments, government budget cuts and government shutdowns, tariffs, and actual or perceived instability in the U.S. and global banking systems, as well as economic conditions specifically affecting SMBs or the industries in which our customers participate;
•changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions, as a result of general economic factors or factors specific to their businesses;
•potential and existing customers choosing our competitors’ products or developing their own solutions in-house;
•the development or introduction of new platforms or services that are easier to use or more advanced than our current suite of services;
•our failure to adapt to new forms of payment that become widely accepted;
•the adoption or retention of more entrenched or rival services in the international markets where we compete;
•our ability to control costs, including our operating expenses;
•the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses, including commissions;
•the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges;
•the amount and timing of costs associated with recruiting, training, and integrating new employees, including employees acquired inorganically, and retaining and motivating existing employees;
•fluctuation in market interest rates, which impacts interest earned on funds held for customers;
•the effects of acquisitions and the integration of acquired technologies and products, including impairment of goodwill;
•the impact of new accounting pronouncements;
•security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform;
•the impact of the ongoing geopolitical conflicts, including any related economic sanctions and countermeasures taken by other countries, and market volatility resulting therefrom; and
•awareness of our brand and our reputation in our target markets.
Any of these and other factors, or the cumulative effect of some of these factors, may cause our operating results to vary significantly. If our operating results fall below the expectations of investors and securities analysts who follow our stock, the price of our common stock could decline substantially, and we could face costly lawsuits, including securities class action suits.
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If we are unable to attract new customers or convert trial customers into paying customers or if our efforts to promote our charge card usage through marketing, promotion, and spending business rewards are unsuccessful, our revenue growth and operating results will be adversely affected.
To increase our revenue, we must continue to attract new customers and increase sales to those customers. As our market matures, product and service offerings evolve, and competitors introduce lower cost or differentiated products or services that compete or are perceived to compete with our platform, our ability to sell subscriptions, drive transaction volume, or successfully increase customer adoption of new products could be impaired. Similarly, our subscription sales could be adversely affected if customers or users perceive that features incorporated into alternative products reduce the need for our platform or if they prefer to purchase products that are bundled with solutions offered by other companies. Further, in an effort to attract new customers, we may offer simpler, lower-priced products or promotions, which may reduce our profitability.
We rely upon our marketing strategy of offering risk-free trials of our platform and other digital marketing strategies to generate sales opportunities. Many of our customers start a risk-free trial of our service. Converting these trial customers to paid customers often requires extensive follow-up and engagement. Many prospective customers never convert from the trial version of a product to a paid version of a product. Further, we often depend on the ability of individuals within an organization who initiate the trial versions of our products to convince decision makers within their organization to convert to a paid version. To the extent that these users do not become, or are unable to convince others to become, paying customers, we will not realize the intended benefits of this marketing strategy, and our ability to grow our revenue will be adversely affected. Similarly, our recently-introduced BILL Cash Accounts, which offer high-yield returns on customer cash deposited into such accounts, among other features, require expenditures by us. In the event BILL Cash Account holders do not utilize our platform's product offerings more broadly, our operating results could be adversely affected. In addition, it may be necessary to engage in more sophisticated and costly sales and marketing efforts in order to attract new customers, and changes in privacy laws and third-party practices may make adding new customers more expensive or difficult. As a result of these and other factors, we may be unable to attract new customers or our related expenses may increase, which would have an adverse effect on our business, revenue, gross margins, and operating results.
In addition, revenue growth from our charge card products is dependent on increasing business spending on our cards. We have been investing in a number of growth initiatives, including to capture a greater share of spending businesses’ total spend, but there can be no assurance that such investments will be effective. In addition, if we develop new products or offerings that attract spending businesses looking for short-term incentives rather than displaying long-term loyalty, attrition could increase and our operating results could be adversely affected. Expanding our service offerings, adding acquisition channels and forming new partnerships or renewing current partnerships could have higher costs than our current arrangements and could dilute our brand. In addition, we offer rewards to spending businesses based on their usage of charge cards. Rewards earned by spending businesses directly reduce our revenue. We operate in a highly competitive environment and may need to increase the rewards that we offer or provide other incentives to spending businesses in order to grow our business. Further, we may elect not to increase such rewards and risk losing certain existing customers as a result. Any significant change in, or failure by management to reasonably estimate, such costs could adversely affect or harm our business, operating results, and financial condition.
We recently launched BILL AI, including our first suite of AI agents, which are designed to simplify and accelerate SMB workflows, including W-9 filings, customer support and assistance, touchless transactions, automatic reconciliations and complex invoice coding. The success of these new agentic AI offerings will depend in part on our ability to deliver them in a way that is both compelling to our customers and cost-effective, and if new or existing customers do not use our AI agents, our business, operating results and financial condition could be adversely affected.
Finally, we seek to accelerate our growth by partnering with businesses to offer embedded payment solutions directly through such partners’ platforms. We announced the launch of several Embed 2.0 partnerships, including most recently with Blackbaud, and previously with Paychex, Oracle NetSuite and Acumatica. Such partnerships may require significant investment and personnel resources to build, customize and enable. If our strategy to offer embedded solutions does not lead to the customer acquisition we anticipate, or on the timeline we envision, our business, operating results and financial condition could be adversely affected.
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If we are unable to retain our current customers, increase customer adoption of our products, sell additional services to our customers, or develop and launch new payment products, our business and growth will be adversely affected.
To date, a significant portion of our growth has been attributable to customer adoption of new and existing payment products. To increase our revenue, in addition to acquiring new customers, we must continue to retain existing customers and convince them to expand their use of our platform by incentivizing them to pay for additional services and driving adoption of new and existing payment products, including ad valorem products such as our BILL Divvy Cards, virtual cards, instant transfer, and international payment offerings. Our ability to retain our customers, drive adoption and increase usage could be impaired for a variety of reasons, including our inability to develop and launch new payment products, SMB preference for lower-cost payment solutions, customer reaction to changes in the pricing of our products, general economic conditions or the other risks described in this Quarterly Report on Form 10-Q. Our ability to sell additional services or increase customer adoption of new or existing products may require more sophisticated and costly sales and marketing efforts, especially for our larger customers. If we are unable to retain existing customers or increase the usage of our platform by them, it would have an adverse effect on our business, revenue, gross margins, and other operating results, and accordingly, on the trading price of our common stock.
We may from time to time determine it is in our interest to strategically exit certain customer segments to focus our sales and marketing efforts, engineering resources and management attention where we believe they will provide the greatest return. For example, we recently announced a transition away from certain of our traditional bank partnerships to focus our resources on our direct, accounting and Embed 2.0 customer acquisition channels, resulting in a net decrease in the number of businesses using our solutions as of September 30, 2026. While we believe this decision will lead to greater growth and efficiency in our operations over time, there can be no assurance that the revenue we generate from our targeted customer segments will match or exceed revenue lost from former customers.
While some of our contracts are non-cancelable annual subscription contracts, most of our contracts with customers and accounting firms primarily consist of open-ended arrangements that can be terminated by either party without penalty at any time. Our customers have no obligation to renew their subscriptions to our platform after the expiration of their subscription period. For us to maintain or improve our operating results, it is important that our customers continue to maintain their subscriptions on the same or more favorable terms. We cannot accurately predict renewal or expansion rates given the diversity of our customer base in terms of size, industry, and geography. Our renewal and expansion rates may decline or fluctuate as a result of several factors, including customer spending levels, customer satisfaction with our platform and customer service, decreases in the number of users, changes in the type and size of our customers, pricing changes, competitive conditions, the acquisition of our customers by other companies, and general economic conditions. In addition, if any of the software providers with which our platform currently integrates should choose to disable two-way synchronization, there can be no assurance that customers shared with such providers would not choose to leave our platform, adversely affecting our business and results of operations. If our customers do not renew their subscriptions, or if they reduce their usage of our platform, our revenue and other operating results will decline and our business will suffer. Moreover, if our renewal or expansion rates fall significantly below the expectations of the public market, securities analysts, or investors, the trading price of our common stock would likely decline.
Our BILL Divvy Card offering exposes us to credit risk and other risks related to spending businesses' ability to pay the balances incurred on their BILL Divvy Cards. Certain of our other current and future product offerings, such as invoice financing, may also subject us to credit risk.
We offer our BILL Divvy Card as a credit product to a wide range of businesses in the U.S., and the success of this product depends on our ability to effectively manage related risks. The credit decision-making process for our BILL Divvy Cards uses techniques designed to analyze the credit risk of specific businesses based on, among other factors, their past purchase and transaction history, as well as their credit scores. Similarly, proprietary risk models and other indicators are applied to assess current or prospective spending businesses who desire to use our cards to help predict their ability to repay. These risk models may not accurately predict creditworthiness due to inaccurate assumptions, including assumptions related to the particular spending business, market conditions, economic environment, or limited transaction history or other data, among other factors. The accuracy of these risk models and the ability to manage credit risk related to our
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cards may also be affected by legal or regulatory requirements, competitors’ actions, changes in consumer behavior, changes in the economic environment, policies of our card-issuing partner banks (Issuing Banks), and other factors.
For a substantial majority of extensions of credit to BILL Spend and Expense spending businesses facilitated through our spend and expense management platform, we purchase from the Issuing Banks participation interests in the accounts receivables generated when spending businesses make purchases using BILL Divvy Cards, and we bear the entire credit risk in the event that a spending business fails to pay card balances. Like other businesses with significant exposure to losses from credit, we face the risk that spending businesses will default on their payment obligations, creating the risk of potential charge-offs. The non-payment rate among spending businesses may increase due to, among other factors, changes to underwriting standards, risk models not accurately predicting the creditworthiness of a business, or a decline in economic conditions, such as a recession, high inflation, government shutdowns or government austerity programs. Spending businesses who miss payments may fail to repay their outstanding statement balances, and spending businesses who file for protection under the bankruptcy laws generally do not repay their outstanding balances. If collection efforts on overdue card balances are ineffective or unsuccessful, we may incur financial losses or lose the confidence of our funding sources. In addition, we have in the past and may in the future tighten our credit requirements for customer or vendor eligibility for such solutions, which may limit the growth and profitability of these solutions or result in customer attrition. We do not file UCC liens or take other security interests on BILL Divvy Card balances, which significantly reduces our ability to collect amounts outstanding from spending businesses that file for bankruptcy protection. Any such losses or failures of our risk models could harm our business, operating results, and financial condition. Non-performance, or even significant underperformance, of the account receivables participation interests that we own could have an adverse effect on our business.
Moreover, the funding model for our BILL Divvy Card product relies on a variety of funding arrangements, including "warehouse facilities." Any significant underperformance of the participation interests we own may adversely impact our relationship with such funding sources and result in an increase in our cost of financing, a modification or termination of our existing funding arrangements or our ability to procure funding, which would adversely affect our business, operating results, financial condition, and future prospects.
We also offer invoice financing whereby, through a relationship with a third-party bank, we extend credit to customers and vendors of our customers, enabling them to finance outstanding invoices. Invoices are typically repaid within a short period, but those that remain outstanding beyond a defined term are assessed interest and we may incur losses. Although this and our other credit offerings, such as instant transfer, are only available to customers that satisfy specific credit eligibility criteria, the credit and risk models we use to determine eligibility may be insufficient. Any failure of our credit or risk models to predict creditworthiness, or any increase in default rates for our credit products, could cause us to incur significant losses and harm our business, operating results, and financial condition.
Our risk management efforts may not be effective to prevent fraudulent activities by our customers, subscribers, spending businesses, or their counterparties, or other third parties which, potentially augmented by AI, could expose us to material financial losses and liabilities and otherwise harm our business.
We offer software that digitizes and automates financial operations for a large number of customers and executes payments to their vendors or from their clients. We are responsible for verifying the identity of our customers and their users, and monitoring transactions for fraud. We have been in the past and will continue to be targeted by parties who seek to commit acts of financial fraud using stolen identities and bank accounts, compromised business email accounts, employee or insider fraud, account takeover, false applications, check fraud, and stolen cards or card account numbers. We may suffer losses from acts of financial fraud committed by our customers and their users, our employees, or third parties. In addition, our customers or spending businesses may suffer losses from acts of financial fraud by third parties posing as our company through account takeover, credential harvesting, use of stolen identities, and various other techniques, which could harm our reputation or prompt us to reimburse our customers for such losses in order to maintain customer and spending business relationships. Finally, we are dependent to a certain degree upon the fraud controls implemented by our card-issuing bank and processing partners in connection with our BILL Spend and Expense products, but bear the risk of fraud losses under such partnerships. Accordingly, we may at times experience
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losses related to these products due to fraudulent activity with limited ability to directly strengthen relevant controls.
The techniques that may be used to perpetrate fraud on our platform are continually evolving, and we expend considerable resources to continue to monitor and combat them. The recent and widespread adoption of AI tools increases the risk of fraudulent activity or other incidents instigated by malicious third parties on our platform and on those of our partners. In addition, when we introduce new products and functionality, or expand existing products, we may not be able to identify all risks created by such new products or functionality. For example, AI agents that initiate or execute payments on behalf of our customers may create new avenues for possible fraud, including attempts by malicious actors to manipulate, impersonate, or compromise such agents or their credentials in order to redirect payments or initiate unauthorized transactions, and our existing fraud controls may not be designed to detect or prevent such activity. Our risk management policies, procedures, techniques, and processes may not be sufficient to identify all of the risks to which we are exposed, to enable us to prevent or mitigate the risks we have identified, or to identify additional risks to which we may become subject in the future. Such policies, procedures, techniques, and processes may also contain errors, or our employees or agents may commit mistakes or errors in judgment as a result of which we may suffer large financial losses. The software-driven and highly automated nature of our platform could enable criminals and those committing fraud to steal significant amounts of money from businesses like ours.
Our current business and anticipated growth will continue to place significant demands on our risk management efforts, and we will need to continue developing and improving our existing risk management infrastructure, policies, procedures, techniques, and processes. As techniques used to perpetrate fraud on our platform become more sophisticated with the use of AI, our teams must similarly evolve to combat such techniques, and we may need to modify our products or services to mitigate fraud risks. As our business grows and becomes more complex, we may be less able to forecast and carry appropriate reserves in our books for fraud-related losses.
Further, these types of fraudulent activities on our platform can also expose us to civil and criminal liability and governmental and regulatory sanctions as well as potentially cause us to be in breach of our contractual obligations to our third-party partners.
The markets in which we participate are competitive, and if we do not compete effectively, our operating results could be harmed.
The market for cloud-based software that automates the financial back-office is highly fragmented, competitive, and rapidly evolving, particularly in light of recent advances in AI. We believe that our primary competition remains the legacy manual processes that SMBs have relied on for generations. Our success will depend, to a substantial extent, on the widespread adoption of our AI-powered automated back-office solutions as alternatives to existing solutions or adoption by customers that are not using any such solutions at all. Some organizations may be reluctant or unwilling to use our platform for several reasons, including concerns about additional costs, uncertainty regarding the reliability and security of cloud-based offerings, or lack of awareness of the benefits of our platform. Our competitors in the payments software space range from large corporations that predominantly focus on enterprise resource planning solutions, to smaller niche suppliers of solutions that focus exclusively on document management, workflow management, accounts payable, accounts receivable, spend and expense management, and/or electronic bill presentment and payment, to companies that offer industry-specific payments solutions. With the introduction of new technologies and market entrants, including AI-native firms, we expect that the competitive environment will remain intense going forward. Our competitors that currently focus on enterprise solutions may offer products to SMBs that compete with ours. In addition, companies that provide solutions that are adjacent to our products and services may decide to enter our market segments and develop and offer products that compete with ours. Software providers, such as Intuit, as well as the financial institutions with which we partner, may internally develop products, acquire existing, third-party products, or may enter into partnerships or other strategic relationships that would enable them to expand their product offerings to compete with our platform or provide more comprehensive offerings than they individually had offered or achieve greater economies of scale than us. These software providers and financial institutions may have the operating flexibility to bundle competing solutions with other offerings, including offering them at a lower price or for no additional cost to customers as part of a larger sale. For example, in October 2023, Intuit launched a native bill payment solution with integration to its QuickBooks accounting software. In addition, Brex, recently acquired by Capital One, and Ramp, firms primarily known for offering spend and expense
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management products, introduced bill payment products in recent periods. While we believe our platform offers much greater functionality than these products, there can be no assurance that QuickBooks customers will not opt to change providers for certain accounts payable services in the future, or that our ability to win, retain and expand our footprint with BILL Divvy Card spending business will not be challenged by these competing offerings. Additionally, the rapid development and adoption of AI may further intensify competition, lower barriers to entry, shorten product development cycles, and make certain features and functionality easier for existing or new competitors to replicate or offer at lower cost. Competitors may use AI to enhance their existing offerings, develop and deploy new products more quickly, improve implementation or support or bundle AI-enabled capabilities with broader platforms. Further, customers' expectations regarding automation, accuracy, ease of use, speed of implementation and breadth of workflow coverage may continue to increase as AI capabilities evolve. If we are unable to develop, deploy and maintain AI-powered solutions in a timely and cost-effective manner or if our competitors are more successful in doing so, our ability to attract and retain customers could be adversely affected. In addition, new entrants not currently considered to be competitors may enter the market through acquisitions, partnerships, or strategic relationships. Many of our competitors and potential competitors have greater name recognition, longer operating histories, more established customer relationships, larger marketing budgets, and greater resources than us. Our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, and customer requirements. Certain competitors may also have long-standing exclusive, or nearly exclusive, relationships with financial services provider partners to accept payment cards and other services that compete with what we offer. As we look to market and sell our platform to potential customers, spending businesses, or partners with existing solutions, we must convince their internal stakeholders that our platform is superior to their current solutions.
We compete on several factors, including:
•product features, quality, breadth, and functionality;
•data asset size;
•the depth, breadth, quality, reliability and ease of use of AI-powered offerings, including agents;
•ease of deployment;
•ability to integrate with leading accounting and banking technology infrastructures;
•ability to automate processes;
•cloud-based delivery architecture;
•advanced security and control features;
•risk management, exception process handling, and regulatory compliance leadership, as evidenced by our money transmitter licenses in all required U.S. jurisdictions and in Canada;
•brand recognition; and
•pricing and total cost of ownership.
There can be no assurance that we will be able to compete successfully against our current or future competitors, and this competition could result in the failure of our platform to continue to achieve or maintain market acceptance, any of which would harm our business, operating results, and financial condition.
We transfer large sums of customer funds daily, and are subject to numerous associated risks which could result in financial losses, damage to our reputation, or loss of trust in our brand, which would harm our business and financial results.
As of September 30, 2026, we had approximately 475,300 businesses using our solutions and total payment volume (TPV) processed was approximately $101.8 billion and $89.3 billion during the three months ended September 30, 2026 and 2025, respectively. We have grown to considerable scale and seek to continue this growth. Accordingly, although we have developed and scaled robust and multi-faceted risk management and compliance processes, our business, which is highly complex, is always subject to the risk of financial losses as a result of credit losses, operational errors, errors by AI tools or agents, software defects, service disruption, employee misconduct, security breaches, or other similar actions or errors on our platform.
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As a provider of accounts payable, accounts receivable, spend and expense management, and payment solutions, we collect and transfer funds on behalf of our customers and our trustworthiness and reputation are fundamental to our business. The occurrence of any credit losses, operational errors, errors by AI tools or agents, software defects, service disruptions, employee misconduct, security breaches, or other similar actions or errors on our platform could result in financial losses to our business and our customers, loss of trust, damage to our reputation, or termination of our agreements with financial institution partners and accountants, each of which could result in:
•loss of customers;
•lost or delayed market acceptance and sales of our platform;
•legal claims against us, including warranty and service level agreement claims;
•regulatory enforcement action; or
•diversion of our resources, including through increased service expenses or financial concessions, and increased insurance costs.
Although our terms of service allocate to our customers the risk of loss resulting from our customers’ errors, omissions, employee fraud, or other fraudulent activity related to their systems, in some instances we may cover such losses for efficiency or to prevent damage to our reputation. In addition, the allocation of responsibility for losses resulting from payments initiated or executed by AI agents may be uncertain, and customers, partners, or regulators may seek to hold us responsible for such losses notwithstanding our contractual terms. Although we maintain insurance to cover losses resulting from our errors and omissions, there can be no assurance that our insurance will cover all losses or our coverage will be sufficient to cover our losses. If we suffer significant losses or reputational harm as a result, our business, operating results, and financial condition could be adversely affected.
Funds that we hold for the benefit of our customers are subject to market, interest rate, credit, foreign exchange, and liquidity risks, as well as general political and economic conditions. The loss of any of these funds could adversely affect our business, operating results and financial condition.
We invest funds that we hold for the benefit of our customers, including funds being remitted to suppliers, in highly liquid, investment-grade marketable securities, money market securities, and other cash equivalents. Nevertheless, our customer fund assets are subject to general market, interest rate, credit, foreign exchange, and liquidity risks. These risks may be exacerbated, individually or in the aggregate, during periods of heavy financial market volatility, such as that experienced in 2008 and 2022, that may result from inflation, high interest rate or recessionary environments, from actual or perceived instability in the U.S. and global banking systems, or from war or other geopolitical conflicts. As a result, we could be faced with a severe constriction of the availability of liquidity, which could impact our ability to fulfill our obligations to move customer money to its intended recipient. For example, while the sudden closure of SVB in March 2023 did not have a material direct impact on our business, it introduced a potential risk of loss because we held certain corporate and customer funds at SVB. Although we were able to move substantially all such funds to large multinational financial institutions and to redirect substantially all customer payment processing previously made through SVB to one of our multinational bank processors, there can be no assurance that we would be able to do so in the future in the event of a similar or more severe, systemic banking crisis. In addition, cash held at banks and financial institutions is subject to applicable deposit insurance limits, and in the event that our corporate or customer funds held at a given institution exceed such limits, or are held in investments that are not covered by deposit insurance, such funds may be unrecoverable in the event of a future bank failure.
We rely upon certain banking partners and third parties to originate payments, process checks, execute wire transfers, and issue virtual cards, which could be similarly affected by a liquidity shortage and further exacerbate our ability to operate our business. Any loss of or inability to access customer funds could have an adverse impact on our cash position and operating results, could require us to obtain additional sources of liquidity, and could adversely affect our business, operating results, and financial condition. In addition to the risks related to customer funds, we are also exposed to interest rate risk relating to our investments of our corporate cash.
We are licensed as a money transmitter in all required U.S. states and registered as a Money Services Business with FinCEN. In certain jurisdictions where we operate, we are required to hold eligible liquid assets,
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as defined by the relevant regulators in each jurisdiction, equal to at least 100% of the aggregate amount of all customer balances. Our ability to manage and accurately account for the assets underlying our customer funds and comply with applicable liquid asset requirements requires a high level of internal controls. As our business continues to grow and we expand our product offerings, we will need to scale these associated internal controls. Our success requires significant public confidence in our ability to properly manage our customers’ balances and handle large and growing transaction volumes and amounts of customer funds. Any failure to maintain the necessary controls or to accurately manage our customer funds and the assets underlying our customer funds in compliance with applicable regulatory requirements could result in reputational harm, lead customers to discontinue or reduce their use of our products, and result in significant penalties and fines, possibly including the loss of our state money transmitter licenses, which would materially harm our business.
We earn revenue from interest earned on customer funds held in trust while payments are clearing, which is subject to market conditions and may decrease as customers’ adoption of electronic payments and technology continues to evolve.
For the three months ended September 30, 2026 and 2025, we generated $37.4 million and $37.7 million, respectively, in revenue from interest earned on funds held in trust on behalf of customers while payment transactions were clearing, or approximately 11% and 12% of our total revenue for such periods, respectively. While these payments are clearing, we deposit the funds in highly liquid, investment-grade marketable securities, and generate revenue that is correlated to the federal funds rate. As interest rates rose in 2022 and 2023, the amount of revenue we generated from such funds increased. However, interest rates subsequently declined in 2024 and 2025, which caused the amount of revenue we generate from these investments to decrease as well. Although the Federal Reserve recently raised the target range for the federal funds rate, interest rates remain below their 2023 levels, and future changes in interest rates are uncertain. Any future decrease in interest rates could reduce the revenue we generate from customer funds and adversely affect our operating results. Additionally, as customers increasingly seek expedited methods of electronic payments, such as instant transfer, or potentially migrate spend to our BILL Divvy Card offering, our revenue from interest earned on customer funds could decrease (even if offset by other revenue) and our operating results could be adversely affected. Finally, in addition to the risks outlined above, any change in laws or applicable regulations that restrict the scope of permissible investments for such customer funds could reduce our interest income and adversely affect our operating results.
Our business depends, in part, on our relationships with accounting firms, financial institutions, software providers and other partners.
Our relationships with accounting firm partners contribute a significant portion of our total revenue. We market and sell our products and services through accounting firms, including via "client advisory services" through which the firms manage finances and make payments on behalf of their clients, in each case through our platform. We also have an exclusive partnership with CPA.com to market certain of our products and services to accounting firms, which then enroll their customers directly onto our platform. Although our relationships with accounting firms are independent of one another, if our reputation in the accounting industry more broadly were to suffer, or if we were unable to establish relationships with new accounting firms and grow our relationships with existing accounting firm partners, our growth prospects would weaken and our business, financial position, and operating results may be adversely affected.
In addition, we have partnered with financial institutions and Embed 2.0 partners to offer our products and services to their customers. These relationships involve risks that may not be present or that are present to a lesser extent with sales to our direct SMB customers. Launching a product offering with our financial institution or Embed 2.0 partners entails integrating our platform with our partners’ websites and apps, which requires significant engineering resources and time to design, deploy, and maintain, and requires developing associated sales and marketing strategies and programs. Delays in decision making, unplanned budget constraints, or changes in our partners’ business, business priorities, or internal resource allocations may result in significant delays to the deployment of our platform and its availability to their customers. Significant delays in the deployment of our platform to our partners’ customers could cause us to incur significant expenditures for platform integration and product launch without generating anticipated revenue in the same period or at all and could adversely impact our operating results. In addition, once we have successfully launched a product offering with a financial institution or Embed 2.0 partner, lower than anticipated customer adoption or unanticipated ongoing system integration costs could result in lower than anticipated profit margins, which could have an
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adverse impact on our business, financial position, and operating results. Moreover, if our partners or their customers experience problems with the operation of our platform, such as service outages or interruptions or security breaches or incidents, our relationship with the partner and our reputation could be harmed and our operating results may suffer.
Finally, we are subject to oversight by certain financial institutions and they conduct audits of our operations, information security controls, and compliance controls. To the extent an audit were to identify material gaps or evidence of noncompliance in our operations or controls it could violate contractual terms with the financial institution, and could materially impact our business operations.
Our recent growth may not be indicative of our future growth, and there is no assurance that we will be able to scale our platform and infrastructure, and manage our growth effectively.
Our revenue was $353.8 million and $314.5 million during the three months ended September 30, 2026 and 2025, respectively. Our TPV was $101.8 billion and $89.3 billion during the three months ended September 30, 2026 and 2025, respectively. Our rate of revenue growth will fluctuate from period to period, as it depends on a number of factors, including our ability to:
•price our platform effectively to attract new customers and increase sales to our existing customers;
•expand the functionality and scope of the products we offer on our platform;
•maintain or improve the rates at which customers subscribe to and continue to use our platform;
•maintain and expand payment volume;
•generate interest income on customer funds that we hold in trust;
•provide our customers with high-quality customer support that meets their needs;
•drive adoption and achieve market recognition of the strengths of our AI agents;
•introduce our products to new markets outside of the U.S.;
•serve SMBs across a wide cross-section of industries;
•expand our target market beyond SMBs;
•manage the effects of macroeconomic conditions, including economic downturns or recessions, inflation, significant political and regulatory developments or changes in trade policy, including government budget cuts, government shutdowns and tariffs, fluctuations in market interest rates and currency exchange rates, and actual or perceived instability in the U.S. and global banking systems on our business and operations and the impacts of ongoing geopolitical conflicts;
•successfully identify and acquire or develop and invest in businesses, products, or technologies that we believe could complement or expand our platform, including developing our AI-powered solutions; and
•increase awareness of our brand and successfully compete with other companies.
We may not successfully accomplish any of these objectives, which makes it difficult for us to forecast our future operating results. Further, the revenue that we derive from interest income on customer funds is dependent on interest rates, which we do not control. Moreover, we expect to continue to spend substantial financial and other resources on our technology infrastructure, product development, and sales, marketing and customer success. As usage of our platform grows, we will also need to devote additional resources to improving and maintaining our infrastructure and third-party integrations to maintain performance. In addition, we will need to appropriately scale our internal business systems and our services organization, including customer support, risk and compliance operations, and professional services, to serve our growing customer base. If the assumptions that we use to plan our business are incorrect or change in reaction to changes in our market, if our investments do not result in increased revenue growth, or if we are unable to maintain consistent revenue or revenue growth, our stock price could be volatile, and it may be difficult to maintain profitability. You
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should not rely on our revenue from any prior quarterly or annual periods as any indication of our future revenue or revenue or payment growth.
Certain credit products, including our BILL Divvy Card, are dependent on our relationship with the Issuing Banks.
The extensions of credit facilitated through our BILL Spend and Expense offering and certain of our accounts payable offerings are originated through our Issuing Banks, which currently include Cross River Bank, WEX Bank and WebBank. There has been significant recent U.S. Congressional and federal administrative agency lawmaking and ruling in the area of program agreements between banks and non-banks involving extensions of credit and the regulatory environment in this area remains unsettled. There has also been significant recent government enforcement and litigation challenging the validity of such arrangements, including disputes seeking to re-characterize lending transactions on the basis that the non-bank party rather than the bank is the “true lender” or “de facto lender”. If the legal structure underlying these bank partnerships or the extensions of credit thereunder were to be successfully challenged on these or other grounds, our ability to offer our credit products on favorable terms or at all may be adversely affected. In addition, certain banks engaged in similar partnerships and activities have been subject to increased regulatory scrutiny. Adverse orders or regulatory enforcement actions against one or more of the Issuing Banks, even if unrelated to our business, could impose restrictions on such Issuing Banks’ ability to continue to extend credit through our platform or on current terms, or could result in the Issuing Banks increasing their oversight or imposing tighter controls over our underwriting practices or compliance procedures or subjecting any new products to be offered by an Issuing Bank to more rigorous reviews.
The Issuing Banks are subject to oversight by the FDIC and state banking regulators and must comply with applicable federal and state banking laws, regulations, and examination requirements. We, in turn, are subject to audit by the Issuing Banks in accordance with FDIC guidance related to management of service providers and other bank-specific requirements pursuant to the terms of our agreements with the Issuing Banks. If we fail to comply with requirements applicable to us by law or contract, or if third-party audits by the Issuing Banks or regulatory examinations of the Issuing Banks, were to conclude that our processes and procedures are insufficient, we may be subject to increased costs or indirect fines or penalties, and the Issuing Banks could terminate their relationships with us.
In the event of a challenge to the legal structure underlying our program agreements with the Issuing Banks or if one or all of the Issuing Banks were to suspend, limit, or cease its operations, or were to otherwise terminate for any reason (including, but not limited to, the failure by an Issuing Bank to comply with regulatory actions or an Issuing Bank experiencing financial distress, entering into receivership, or becoming insolvent), we would need to identify and implement alternative, compliant, bank relationships or otherwise modify our business practices in order to be compliant with prevailing law or regulation, which could result in business interruptions or delays, force us to incur additional expenses, and potentially interfere with our existing customer and spending business relationships or make us less attractive to potential new customers and spending businesses, any of which could adversely affect our business, operating results, and financial condition.
We rely on a variety of funding sources to support our BILL Divvy Card offering. If our existing funding arrangements are not renewed or replaced, or if our existing funding sources are unwilling or unable to provide funding to us on terms acceptable to us, or at all, it could adversely affect our business, operating results, financial condition, cash flows, and future prospects.
To support the operations and growth of our spend and expense management business, we maintain a variety of funding arrangements, including "warehouse facilities," which provide for an aggregate of $600.0 million in borrowing capacity pursuant to our Revolving Credit Facilities, as described in Note 7 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. In particular, we have financing arrangements in place pursuant to which we purchase from the Issuing Banks participation interests in the accounts receivables generated when BILL Spend and Expense spending businesses make purchases using our cards. We typically fund some portion of these participation interest purchases by borrowing under credit facilities with our finance partners, although we primarily use corporate cash to purchase participation interest.
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If our finance partners terminate or interrupt their financing or purchase of participation interests or are unable to offer terms which are acceptable to us, we may have to fund these purchases using corporate cash, which may place significant stress on our cash resources. An inability to purchase participation interests from the Issuing Banks, whether funded through financing or corporate cash, could result in the banks’ limiting extensions of credit to spending businesses or ceasing to extend credit for our cards altogether or terminating their program agreements with us, which would interrupt or limit our ability to offer our card products and materially and adversely affect our business.
We cannot guarantee that these funding arrangements will continue to be available on favorable terms or at all, and our funding strategy may change over time, depending on the availability of such funding arrangements. In addition, our funding sources may curtail access to uncommitted financing capacity, fail to renew or extend facilities, or impose higher costs to access funding upon reassessing their exposure to our industry or in light of changes to general economic, market, credit, or liquidity conditions. Further, our funding sources may experience financial distress, enter into receivership, or become insolvent, which may prevent us from accessing financing from these sources. In addition, because our borrowings under current and future financing facilities may bear interest based on floating rate interest rates, our interest costs may increase if market interest rates rise. Finally, because borrowings under our Revolving Credit Facilities are subject to a limited guaranty by BILL Holdings, Inc., we may need to use our cash or cash equivalents to remedy any alleged breaches by our wholly-owned subsidiaries party to such agreements.
If our existing funding arrangements are not renewed or replaced or our existing funding sources are unwilling or unable to provide funding to us on terms acceptable to us, or at all, we may need to secure additional sources of funding or reduce our spend and expense management operations significantly. Further, as the volume of credit facilitated through our platform increases, we may need to expand the funding capacity under our existing funding arrangements or add new sources of capital. The availability and diversity of our funding arrangements depends on various factors and are subject to numerous risks, many of which are outside of our control. If we are unable to maintain access to, or to expand, our network and diversity of funding arrangements, our business, operating results, financial condition, and future prospects could be materially and adversely affected.
If we do not or cannot maintain the compatibility of our platform with popular software solutions or offerings of our partners, our revenue and growth prospects will decline.
To deliver a comprehensive solution, our platform integrates with popular software solutions including Intuit QuickBooks, Oracle NetSuite, Sage Intacct, Xero, and Microsoft Dynamics 365 Business Central, through APIs made available by these software providers. We automatically synchronize certain data between our platform and these software systems relating to invoices and payment transactions between our customers and their suppliers and clients. This two-way sync saves time for our customers by reducing duplicative manual data entry and provides the basis for managing cash-flow through an integrated solution for accounts payable, accounts receivable, spend and expense management, and payments.
If any of the software providers change the features of their APIs, discontinue their support of such APIs, restrict our access to their APIs, or alter the terms or practices governing their use in a manner that is adverse to our business, we may be restricted or may not be able to provide synchronization capabilities, which could significantly diminish the value of our platform and harm our business, operating results, and financial condition. In addition, if any of these software providers reconfigure their platforms in a manner that no longer supports our integration with their software, we would lose customers and our business would be adversely affected.
If we are unable to increase adoption of our platform with customers of these software solutions, our growth prospects may be adversely affected. In addition, any of these software providers may seek to develop a payment solution of its own, acquire a solution to compete with ours, or decide to partner with other competing applications, any of which its SMB customers may select over ours, thereby harming our growth prospects and reputation and adversely affecting our business and operating results.
We depend on third-party service providers to process transactions on our platform and to provide other services important to the operation of our business. Any significant disruption in services provided by these vendors could prevent us from processing transactions on our platform, result in
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other interruptions to our business and adversely affect our business, operating results and financial condition.
We depend on banks, including JPMorgan Chase, to process ACH transactions and checks for our customers. We also rely on third-party providers to support other aspects of our business, including, for example, for card transaction processing, check printing, real-time payments, virtual and physical card issuance, sanctions screening, and our cross-border funds transfer capabilities. If we are unable to effectively manage our third-party relationships, we are unable to comply with security, compliance, or operational obligations to which we are subject under agreements with these providers, these providers are unable to meet their obligations to us, or we experience substantial disruptions in these relationships, including as a result of the closure or insolvency of banks with which we do business, our business, operating results, and financial condition could be adversely impacted. In addition, in some cases a provider may be the sole source, or one of a limited number of sources, of the services they provide to us and we may experience increased costs and difficulties in replacing those providers and replacement services may not be available on commercially reasonable terms, on a timely basis, or at all.
We use AI in our business, and any challenges with successfully developing and deploying new AI tools, properly managing the use of AI, or complying with emerging AI regulations could result in reputational harm, competitive harm, legal liability, and regulatory compliance burdens, and adversely affect our results of operations.
We have incorporated, and expect to continue to incorporate, AI features into our platform and product offerings, and our success will depend in part on our ability to do so in a way that is both compelling to the businesses using our solutions and cost-effective. We leverage AI to prepopulate invoices based on the historical behavior of businesses using our solutions and to aid our evaluation of businesses' creditworthiness to offer them and their counterparties expedited means of payment, among other things. In addition, we previously launched AI agents to enable automatic W-9 collection, receipt reconciliation and invoice coding, among other capabilities, and we announced a new suite of AI features, including risk intelligence and AI-assisted onboarding capabilities, as well as a pilot program in which AI agents execute approved buyer invoice payments through supplier portals. In the future, we expect to launch additional agents covering a wide range of services. AI technologies, and agentic AI in particular, are new and rapidly evolving, have not been widely tested in financial services and payments applications, and may not perform as intended or achieve broad market acceptance. We have made and expect to continue to make significant investments in developing and deploying our AI technology, including costs associated with third-party AI models, computing power, and specialized personnel, which may increase and may not be offset by corresponding revenue. There can be no assurances, however, that our development efforts will be successful. Our competitors and other third parties may incorporate AI into their products and offerings more quickly or more successfully than us, which could impair our ability to compete effectively, cause us to lose some or all of our investments in developing these products, and adversely affect our results of operations.
Additionally, if the content, analyses, recommendations, or actions that AI applications produce or assist in producing are, or are alleged to be, inaccurate, deficient, or biased, our business, financial condition, and results of operations may be adversely affected. AI models may generate inaccurate or fabricated outputs, and AI agents that act autonomously or semi-autonomously on behalf of our customers, including by initiating or executing payments, may take unintended or unauthorized actions, or fail to follow customer instructions or approval workflows, which could result in losses to us or our customers, disputes, reimbursement obligations, and claims. Furthermore, the integration of third-party AI models with our products and services may rely, in part, on certain safeguards implemented by the third-party developers of the underlying AI models, including those related to the accuracy, bias, and other variables of the data, and these safeguards may be insufficient. AI applications are also subject to security vulnerabilities, including prompt injection, model manipulation, and other adversarial attacks, through which malicious actors may seek to cause AI tools or agents to disclose sensitive information, bypass controls, or initiate fraudulent transactions. The use of AI applications has resulted in, and may in the future result in, cybersecurity incidents that implicate the personal data of customers analyzed within such applications. Any such cybersecurity incidents could adversely affect our reputation and results of operations. AI also presents emerging ethical issues and potential social harms, including concerns regarding bias, transparency, privacy, and the impact of AI on employment, and if our use of AI, or AI generally, becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability. Legislation that would govern the development or use of AI is under consideration at the federal level and has
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been enacted or is under consideration in the U.S. at the state and local level, as well as internationally. For example, several U.S. states have enacted AI governance laws that impose transparency, impact assessment, and other requirements on deployers of high-risk AI systems, and the status of such state laws is uncertain as the federal government has taken steps toward broad federal regulation of AI that could preempt state law. The EU Artificial Intelligence Act (EU AI Act), which aims to introduce a common regulatory and legal framework for AI, became effective in August 2024. Once fully implemented, the EU AI Act will regulate AI providers and entities making use of AI tools in a professional capacity, and may require the implementation of risk management systems, data governance measures, human oversight, and other technical and organizational measures, depending on the risk classification of the AI system. In addition, existing laws, including financial services and consumer protection laws, may be interpreted in ways that affect the operation of our AI technologies, and payment networks, partner banks, and other counterparties may impose their own requirements on AI agents that initiate payments. Our ability to use AI and machine learning may be constrained by current or future laws, regulatory or self-regulatory requirements, which may be inconsistent across jurisdictions. The rapid evolution of AI, including potential government regulation of AI and its various uses, will require significant resources to develop, test and maintain our platform, offerings, services, and features to help us implement AI ethically in order to minimize unintended, harmful impact.
Our use of AI in financial services applications may also subject us to fair lending, consumer protection, and anti-discrimination requirements. If AI models used in credit underwriting, fraud detection, or other decision-making processes produce discriminatory outcomes, even unintentionally, we could face regulatory enforcement actions, litigation, and reputational harm. In addition, some of our AI-powered features rely on third-party AI models and services, and any disruption, degradation, or discontinuation of such third-party services could adversely affect our platform's functionality and our customers' experience. We may also face intellectual property claims related to our use of AI, including claims that training data or AI-generated outputs infringe third-party intellectual property rights. The allocation of liability among us, our customers, our partners, and third-party AI providers for errors or harms caused by AI is uncertain and evolving, and our contractual protections may not be enforceable or sufficient. Further, our insurance may not extend to all AI-related risks and may not cover all losses for errors or omissions caused by AI.
If we lose our founder or key members of our management team or are unable to attract and retain executives and employees we need to support our operations and growth, our business may be harmed.
Our success and future growth depend upon the continued services of our management team and other key employees. Our founder and Chief Executive Officer, René Lacerte, is critical to our overall management, as well as the continued development of our products, our partnerships, our culture, our relationships with accounting firms, and our strategy. From time to time, there may be changes in our management team resulting from the hiring or departure of executives and key employees, which could disrupt our business. In addition, we may face challenges retaining senior management of acquired businesses. Our senior management and key employees are employed on an at-will basis. We currently do not have “key person” insurance for any of our employees. Certain of our key employees have been with us for a long period of time and have fully vested stock options or other long-term equity incentives that may become valuable and are publicly tradable. The loss of our founder, or one or more of our senior management, key members of senior management of acquired companies or other key employees could harm our business, and we may not be able to find adequate replacements. We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees or that we would be able to timely replace members of our senior management or other key employees should any of them depart.
In addition, to execute our business strategy, we must attract and retain highly qualified personnel. We compete with many other companies for software developers with high levels of experience in designing, developing, and managing cloud-based software and payments systems, as well as for skilled legal and compliance and risk operations professionals. Competition for software developers, compliance and risk management personnel, and other key employees in our industry and locations is intense and increasing and may be exacerbated in tight labor markets. We may also face increased competition for personnel from other companies which adopt approaches to remote work that differ from ours. In addition, the current regulatory environment related to immigration is uncertain, including with respect to the availability of H1-B and other visas. If a new or revised visa program is implemented, it may impact our ability to recruit, hire, retain, or effectively collaborate with qualified skilled personnel, including in the areas of AI and machine learning, and
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payment systems and risk management, which could adversely impact our business, operating results, and financial condition. Many of the companies with which we compete for experienced personnel have greater resources than we do and can frequently offer such personnel substantially greater compensation than we can offer. If we fail to identify, attract, develop, and integrate new personnel, or fail to retain and motivate our current personnel, our growth prospects would be adversely affected.
Future acquisitions, strategic investments, partnerships, collaborations, or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our operating results and financial condition.
We have in the past and may in the future seek to acquire or invest in businesses, products, or technologies that we believe could complement or expand our platform, enhance our technical capabilities, or otherwise offer growth opportunities. For example, in November 2022 we completed the acquisition of Finmark Financial, Inc. to augment our financial planning product offerings. However, we have limited experience in acquiring other businesses, and we may not successfully identify desirable acquisition targets in the future. Moreover, an acquisition, investment, or business relationship may not further our business strategy or result in the economic benefits or synergies as expected or may result in unforeseen operating difficulties and expenditures, including disrupting our ongoing operations, diverting management from their primary responsibilities, subjecting us to additional liabilities, increasing our expenses, and adversely impacting our business, financial condition, and operating results.
In addition, the technology and information security systems and infrastructure of businesses we acquire may be underdeveloped or subject to vulnerabilities, subjecting us to additional liabilities. We could incur significant costs related to the implementation of enhancements to or the scaling of information security systems and infrastructure of acquired businesses and related to the remediation of any related security breaches. If security, data protection, and information security measures in place at businesses we acquire are inadequate or breached, or are subject to cybersecurity attacks, or if any of the foregoing is reported or perceived to have occurred, our reputation and business could be damaged and we could be subject to regulatory scrutiny, investigations, proceedings, and penalties. We may also acquire businesses whose operations may not be fully compliant with all applicable law, including economic and trade sanctions and anti-money laundering, counter-terrorist financing, and privacy laws, subjecting us to potential liabilities and requiring us to spend considerable time, effort, and resources to address.
Moreover, we may acquire businesses whose management or compliance functions require significant investments to support current and anticipated future product offerings, or that have underdeveloped internal control infrastructures or procedures or with respect to which we discover significant deficiencies or material weaknesses. The costs that we may incur to implement or improve such functions, controls, and procedures may be substantial and we could encounter unexpected delays and challenges related to such activity.
Given the complexity of our platform and the distinct interface and tools that we offer to our accounting firm partners and financial institution partners, it may be critical that certain businesses or technologies that we acquire be successfully and fully integrated into our platform. In addition, some acquisitions may require us to spend considerable time, effort, and resources to consummate and/or to integrate employees from the acquired business into our teams, and acquisitions of companies in lines of business in which we lack expertise may require considerable management time, oversight, and research before we see the desired benefit of such acquisitions. Therefore, we may be exposed to unknown liabilities and the anticipated benefits of any acquisition, investment, or business relationship may not be realized, if, for example, we fail to successfully integrate such acquisitions, or the technologies associated with such acquisitions, into our company.
Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, as well as unfavorable accounting treatment and exposure to claims and disputes by third parties, including intellectual property claims. We also may not generate sufficient financial returns to offset the costs and expenses related to any acquisitions. In addition, if an acquired business fails to meet our expectations, our business, operating results, and financial condition may suffer.
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If we fail to offer high-quality customer support, or if our support is more expensive than anticipated, our business and reputation could suffer.
Our customers rely on our customer support services to resolve issues and realize the full benefits provided by our platform, as well as to understand and fully utilize the growing suite of products we offer. A range of high-quality support options is critical for the renewal and expansion of our subscriptions and driving additional transaction volume with existing customers: we provide customer support via chat, email, and phone through a combination of AI-assisted interactions with the BILL Virtual Assistant as well as robust support from a highly trained staff of customer success personnel. If we do not help our customers quickly resolve issues and provide effective ongoing support, or if our support personnel or methods of providing support are insufficient to meet the needs of our customers, our ability to retain customers, increase adoption by our existing customers, and acquire new customers could suffer, and our reputation with existing or potential customers could be harmed. If we are not able to meet the customer support needs of our customers during the hours that we currently provide support, we may need to increase our support coverage or provide additional support, which may reduce our profitability.
If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing business needs, requirements, or preferences, our products may become less competitive.
The market for SMB financial software solutions is relatively new and subject to ongoing technological change, evolving industry standards, payment methods, and changing regulations, as well as changing customer needs, requirements, and preferences. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis, including launching a range of new products and services, including AI-enabled tools. In addition, the market for our spend and expense management solution is new and fragmented, and it is uncertain whether we will achieve and sustain high levels of demand and market adoption. The success of any new product and service, or any enhancements or modifications to existing products and services, depends on several factors, including the timely completion, introduction, and market acceptance of such products and services, enhancements, and modifications. If we are unable to enhance our platform, add new payment methods, or develop new products that keep pace with technological and regulatory change and achieve market acceptance, or if new technologies emerge that are able to deliver competitive products and services at lower prices, more efficiently, more conveniently, or more securely than our products, our business, operating results, and financial condition would be adversely affected. Furthermore, modifications to our existing platform or technology will increase our research and development expenses. Any failure of our services to operate effectively with existing or future network platforms and technologies could reduce the demand for our services, result in customer or spending business dissatisfaction, and adversely affect our business.
If the prices we charge for our services are unacceptable to our customers, our operating results will be harmed.
We generate revenue by charging customers a fixed monthly rate per user for subscriptions as well as transaction fees. As the market for our platform matures, or as new or existing competitors introduce new products or services that compete with ours, we may experience pricing pressure and be unable to renew our agreements with existing customers or attract new customers at prices that are consistent with our pricing model and operating budget. Our pricing strategy for new products we introduce and existing products we continue to offer may not be successful in attracting or retaining customers, and our competitors could choose to bundle certain products and services competitive with ours. If this were to occur, it is possible that we would have to change our pricing strategies or reduce our prices, which could harm our revenue, gross profits, and operating results.
Interruptions or delays in the services provided by AWS or other third-party data centers or internet service providers could impair the delivery of our platform and our business could suffer.
We host our platform using third-party cloud infrastructure services, including certain co-location facilities. We also use public cloud hosting with Amazon Web Services (AWS). All of our products utilize resources operated by us through these providers. We therefore depend on our third-party cloud providers’ ability to protect their data centers against damage or interruption from natural disasters, power or
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telecommunications failures, criminal acts, and similar events. Our operations depend on protecting the cloud infrastructure hosted by such providers by maintaining their respective configuration, architecture, and interconnection specifications, as well as the information stored in these virtual data centers and transmitted by third-party internet service providers. We have periodically experienced service disruptions in the past, and we cannot assure you that we will not experience interruptions or delays in our service in the future. We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the data storage services we use. Although we have disaster recovery plans that utilize multiple data storage locations, any incident affecting their infrastructure that may be caused by fire, flood, severe storm, earthquake, power loss, telecommunications failures, unauthorized intrusion, computer viruses and disabling devices, natural disasters, military actions, terrorist attacks, negligence, and other similar events beyond our control could negatively affect our platform. Any prolonged service disruption affecting our platform for any of the foregoing reasons could damage our reputation with current and potential customers, expose us to liability, cause us to lose customers, or otherwise harm our business. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. System failures or outages, including any potential disruptions due to significantly increased global demand on certain cloud-based systems, could compromise our ability to perform these functions in a timely manner, which could harm our ability to conduct business or delay our financial reporting. Such failures could adversely affect our operating results and financial condition.
Our platform is accessed by many customers, often at the same time. As we continue to expand the number of our customers and products available to our customers, we may not be able to scale our technology to accommodate the increased capacity requirements, which may result in interruptions or delays in service. In addition, the failure of data centers, internet service providers, or other third-party service providers to meet our capacity requirements could result in interruptions or delays in access to our platform or impede our ability to grow our business and scale our operations. If our third-party infrastructure service agreements are terminated, or there is a lapse of service, interruption of internet service provider connectivity, or damage to data centers, we could experience interruptions in access to our platform as well as delays and additional expense in arranging new facilities and services.
Failure to effectively develop and expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our products.
Our ability to increase our customer base and achieve broader market acceptance of our platform will depend to a significant extent on our ability to expand our sales and marketing organizations, and to deploy our sales and marketing resources efficiently. Although we will adjust our sales and marketing spend levels as needed in response to changes in the economic environment, we plan to continue expanding our direct-to-SMB sales force as well as our sales force focused on identifying new partnership opportunities. We also dedicate significant resources to sales and marketing programs, including digital advertising through services such as Google AdWords. The effectiveness and cost of our online advertising has varied over time and may vary in the future due to competition for key search terms, changes in search engine use, and changes in the search algorithms used by major search engines. These efforts will require us to invest significant financial and other resources.
In addition, our ability to broaden the spending business base for our BILL Spend and Expense offerings and achieve broader market acceptance of these products will depend to a significant extent on the ability of our sales and marketing organizations to work together to drive our sales pipeline and cultivate spending business and partner relationships to drive revenue growth. If we are unable to recruit, hire, develop, and retain talented sales or marketing personnel, if our new sales or marketing personnel and partners are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing programs are not effective, our ability to broaden our spending business base and achieve broader market acceptance of our platform could be harmed. Moreover, our BILL Spend and Expense marketing efforts depend significantly on our ability to call on our current spending businesses to provide positive references to new, potential spending business customers. Given our limited number of long-term spending businesses, the loss or dissatisfaction of any spending business could substantially harm our brand and reputation, inhibit the market adoption of our offering, and impair our ability to attract new spending businesses and maintain existing spending businesses.
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Our business and operating results will be harmed if our sales and marketing efforts do not generate significant increases in revenue. We may not achieve anticipated revenue growth from expanding our sales force if we are unable to hire, develop, integrate, and retain talented and effective sales personnel, if our new and existing sales personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing programs and advertising are not effective.
We currently handle cross-border payments and plan to expand our payments offerings to new customers and to make payments to new countries, creating a variety of operational challenges.
A component of our growth strategy involves our cross-border payments product and expanding our operations internationally. We introduced cross-border payments, and now, working with certain international payment services, we offer our U.S.-based customers the ability to disburse funds to over 130 countries. We are continuing to adapt to and develop strategies to address payments to new countries. However, there is no guarantee that such efforts will have the desired adoption by the businesses using our solutions or that cross-border payments will be monetized in the way we expect.
Our cross-border payments product and international expansion strategy involve a variety of risks, including:
•complying with financial regulations and our ability to comply and obtain any relevant licenses in applicable countries or jurisdictions;
•macroeconomic conditions and the general environment for international trade, including tariffs, currency exchange rate fluctuations and our cross-border payments providers' ability to provide us favorable currency exchange rates, which may impact our revenues and expenses;
•reduction or cessation in cross-border trade resulting from government sanctions, increased trade tariffs or restrictions, other trade regulations or strained international relations;
•potential application of more stringent regulations relating to AI, environmental and social matters, privacy, information protection, and data security, and the authorized use of, or access to, commercial and personal information;
•sanctions imposed by applicable government authorities or jurisdictions, such as OFAC, or comparable authorities in other countries;
•exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act (FCPA), U.S. bribery laws, the UK Bribery Act, and similar laws and regulations in other jurisdictions;
•unexpected changes in tax laws; and
•cessation of business of a cross-border payment service provider or other limitation or inability of a cross-border payment service provider to make payments into certain countries, including for the reasons set forth above.
If we invest substantial time and resources to further expand our cross-border payments offering and are unable to do so successfully and in a timely manner, our business and operating results may suffer.
A substantial portion of our revenue is derived from interchange fees, which exposes us to potential variability in income and other risks.
Certain of our products, including our BILL Divvy Card and our virtual card products, generate revenue primarily from interchange fees paid by the supplier accepting the cards for purchase transactions. Interchange fees comprise a substantial portion of our total revenue. The amount of interchange fees we earn is highly dependent upon the interchange rates set by the third-party card networks and, from time to time, card networks change the interchange fees and assessments they charge for transactions processed using their networks. Significant changes to interchange fee rates, including as a result of card program modifications, could materially impact our revenue and the profitability of our card payment products. In addition, interchange fees are the subject of intense legal and regulatory scrutiny and competitive pressures in the electronic payments industry. For example, in March 2024, Visa and Mastercard reached a proposed settlement to pending antitrust litigation, that would have provided savings to merchants by reducing interchange fees on card transactions by
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setting a five year cap on interchange fee rates and permitting merchants to pass along surcharges for credit card use to cardholders or reject cards altogether, among other changes. This proposed settlement was subsequently rejected by the court in June 2024 and the matter may proceed to trial. While the impact of this litigation on our business remains unclear, any restrictions imposed by a judgment of the court or one or more new settlements may reduce the amount of interchange fees we receive from transactions using our card products, which could negatively impact our revenues. In addition, if customers are deterred or prevented from using our card products as a result of merchant policies, new surcharges or reduced attractiveness of rewards programs, our business, financial condition, and operating results could be adversely impacted.
Interchange fees generally involve a variety of risks, including:
•fluctuations due to the variability of card acceptance practices at supplier locations, and the resulting effect on our revenue;
•changes in card network interchange rates or rules which could dissuade new and existing card-accepting suppliers from continuing to accept card payments;
•unexpected compliance and risk management imposed by the card networks or resulting from changes in regulation;
•declines in the number of active card-accepting suppliers due to concerns about cost or operational complexity; and
•unexpected changes in card acceptance or card issuing rules which may impact our ability to offer this payment product.
Any of these developments could adversely affect our business, financial condition, and operating results.
If we fail to maintain and enhance our brands, our ability to expand our customer base will be impaired and our business, operating results, and financial condition may suffer.
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. Successfully maintaining and enhancing our brands will depend largely on the effectiveness of our marketing and demand generation efforts, our ability to provide reliable products that continue to meet the needs of our customers at competitive prices, our ability to maintain our customers’ trust, our ability to continue to develop new functionality and products, and our ability to successfully differentiate our platform and products from competitive products and services. Our brand promotion activities may not generate customer awareness or yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand. In the fall of 2023, we began phasing out the Divvy brand and renamed our spend and expense products to feature the BILL name. If this rebranding transition is unsuccessful, or if we fail to successfully promote and maintain our brands generally, our business could suffer. In addition, our ability to protect our BILL brand is limited as a result of its descriptive nature.
Changes to payment card networks rules or fees could harm our business.
We are required to comply with the Mastercard, American Express, and Visa payment card network operating rules applicable to our card products. We have agreed to reimburse certain service providers for any fines they are assessed by payment card networks as a result of any rule violations by us. We may also be directly liable to the payment card networks for rule violations. The payment card networks set and interpret the card operating rules. The payment card networks could adopt new operating rules, interpret or reinterpret existing rules that we or our processors might find difficult or even impossible to follow, or costly to implement, or modify existing programs to reduce the interchange fees we receive from our card products. We also may seek to introduce other card-related products in the future, which would entail compliance with additional operating rules. As a result of any violations of rules, new rules being implemented, or increased fees, we could be hindered or lose our ability to provide our card products, which would adversely affect our business. In addition, we are contractually obligated to comply with card network rules as a card program manager. As a result of any violations of these rules or new rules being implemented, we could lose our ability or rights to act as a card program manager.
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Our reductions in force, transition to a remote-first company, and restructuring efforts may result in unanticipated costs or consequences.
We are committed to undertaking measures to improve organizational agility and efficiency, while also seeking to drive greater profitability. In furtherance of this commitment, in October 2025 and March 2026, we announced RIFs impacting certain of our employees. In addition, in May 2026, we announced another RIF impacting approximately 30% of our workforce. In connection with such RIFs, we have incurred and expect to incur certain costs in the near term, including cash expenditures related to severance payments, certain retention payments, employee benefits and employee transition costs. In addition, as part of our new operating strategy, we are transitioning to a remote-first company and reducing our real property footprint. The RIFs, the transition to a remote-first company and other restructuring measures we may undertake may result in other unintended consequences, including further employee attrition, damage to our corporate culture and decreased employee morale among our remaining employees, diversion of management attention, adverse effects to our reputation as an employer, loss of institutional knowledge and expertise, and potential failure or delays to meet operational and growth targets due to the loss of qualified employees. If we experience any of these adverse consequences, the RIFs, the transition to a remote-first company and other restructuring measures may not achieve their intended benefits, or the benefits, even if achieved, may not be adequate to meet our long-term profitability and operational expectations, which could adversely affect our business, operating results and financial condition.
We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all.
We have funded our operations since inception primarily through equity and equity-linked securities offerings, sales of subscriptions to our products, transaction fees, interest earned on customer funds and debt financings. We cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business. We intend to continue to make investments to support our business, which may require us to engage in equity or debt financings to secure additional funds. We may also seek to raise additional capital from equity or debt financings on an opportunistic basis when we believe there are suitable opportunities for doing so. Additional financing may not be available on terms favorable to us, if at all. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, operating results, and financial condition. If we incur additional debt, the debt holders would have rights senior to holders of common stock to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. Furthermore, if we issue additional equity securities, including in connection with merger and acquisition transactions, stockholders will experience dilution. In addition, new equity securities could have rights senior to those of our common stock. In recent periods, the trading prices for our common stock and other technology companies have been highly volatile, which may reduce our ability to access capital on favorable terms or at all. More recently, credit and capital markets have been impacted by instability in the U.S. banking system. In addition, a recession or depression, high inflation, or other sustained adverse market event could materially and adversely affect our business and the value of our common stock. Because our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any future issuances of debt or equity securities. As a result, our stockholders bear the risk of future issuances of debt or equity securities reducing the value of our common stock and diluting their interests.
Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.
As of June 30, 2026, we had net operating loss (NOL) carryforwards of $1.0 billion and $847.8 million for federal and state tax purposes, respectively, that are available to reduce future taxable income. If not utilized, a portion of state NOL carryforwards will begin to expire in fiscal 2027. As of June 30, 2026, the federal and certain state NOL carryforwards do not expire and will carry forward indefinitely until utilized. As of June 30, 2026, we also had research and development tax credit carryforwards of $99.0 million and $67.6 million for federal and state tax purposes, respectively. If not utilized, the federal tax credits will begin to expire in fiscal 2041. The majority of the state tax credits do not expire and will carry forward indefinitely until utilized. In general, under Sections 382 and 383 of the U.S. Internal Revenue Code of 1986, as amended (the Code), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change
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NOLs and other tax attributes, such as research tax credits, to offset future taxable income or income tax. If it is determined that we have in the past experienced an ownership change, or if we undergo one or more ownership changes as a result of future transactions in our stock, then our ability to utilize NOLs and other pre-change tax attributes could be limited by Sections 382 and 383 of the Code. Future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Sections 382 or 383 of the Code. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. For these reasons, we may not be able to utilize a material portion of the NOLs. In addition, any future changes in tax laws could impact our ability to utilize NOLs in future years and may result in greater tax liabilities than we would otherwise incur and adversely affect our cash flows and financial position.
We could be required to collect additional sales taxes or be subject to other tax liabilities that may increase the costs our customers would have to pay for our offering and adversely affect our operating results.
The vast majority of states have considered or adopted laws that impose tax collection obligations on out-of-state companies. States where we have nexus may require us to calculate, collect, and remit taxes on sales in their jurisdiction. Additionally, the U.S. Supreme Court's 2018 ruling in South Dakota v. Wayfair, Inc. et al (Wayfair) allowed states to require online sellers to collect and remit sales and use tax despite not having a physical presence in the buyer’s state. In response to Wayfair, or otherwise, states or local governments may enforce laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions. We may be obligated to collect and remit sales and use taxes in states where we have not collected and remitted sales and use taxes. A successful assertion by one or more states requiring us to collect taxes where we historically have not or presently do not do so could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest. The imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us, put us at a perceived competitive disadvantage if they do not impose similar obligations on our competitors, and decrease our future sales, which could adversely affect our business and operating results.
Changes in our effective tax rate, tax assets or tax liabilities may adversely affect our operating results.
Our effective tax rate may fluctuate due to several factors, including:
•changes in the relative amounts of income before taxes in the various U.S. and international jurisdictions in which we operate due to differing statutory tax rates in various jurisdictions;
•changes in tax laws, tax treaties, and regulations or the interpretation of them, including the Inflation Reduction Act of 2022 and the One Big Beautiful Bill Act of 2025 (the impact of which we are still assessing);
•changes to our assessment about the appropriateness of current valuation allowances related to our deferred tax assets in light of our continued growth and recent financial performance;
•the outcome of current and future tax audits, examinations, or administrative appeals; and
•limitations or adverse findings regarding our ability to do business in some jurisdictions.
Any of these developments could adversely affect our operating results.
Natural catastrophic events, pandemics, and man-made problems such as power-disruptions, computer viruses, data security breaches, war, and terrorism may disrupt our business.
Natural disasters, pandemics such as the COVID-19 pandemic, other catastrophic events, and man-made problems, such as terrorism, war, or economic or trade sanctions related to war or other geopolitical conflicts, may cause damage or disruption to our operations, international commerce, and the global economy, and thus could harm our business. We have a large employee presence in the San Francisco Bay Area in California and in Draper, Utah. The west coast of the U.S. contains active earthquake zones and is subject to frequent wildfire outbreaks and the Houston area frequently experiences significant hurricanes. In the event of a major earthquake, hurricane, or catastrophic event such as fire, flooding, power loss, telecommunications failure, vandalism, cyber-attack, war, or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our application development, lengthy interruptions in our products, breaches of data security, and loss of critical data, all of which could harm our business, operating
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results, and financial condition. In addition, data centers depend on predictable and reliable energy and networking capabilities, which could be affected by a variety of factors, including climate change.
Additionally, as computer malware, viruses, and computer hacking, fraudulent use attempts, and phishing attacks have become more prevalent and sophisticated, including through the use of AI, we, and third parties upon which we rely, face increased risk in maintaining the performance, reliability, security, and availability of our solutions and related services and technical infrastructure to the satisfaction of our customers. Any computer malware, viruses, computer hacking, fraudulent use attempts, phishing attacks, or other data security breaches related to our network infrastructure or information technology systems or to computer hardware we lease from third parties, could, among other things, harm our reputation and our ability to retain existing customers and attract new customers. We rely on a variety of third-party service providers to support our infrastructure, and a security breach or incident affecting any of these providers could have similar adverse effects on our business.
The insurance we maintain may be insufficient to cover our losses resulting from disasters, cyber-attacks, or other business interruptions, and any incidents may result in loss of, or increased costs of, such insurance. Finally, we have elected to self-insure for certain employee medical and vision matters. Accordingly, in the event of a pandemic or other catastrophic event, we may be at a greater risk that our financial condition will be adversely affected.
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.
We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of the New York Stock Exchange (NYSE), and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time consuming, or costly, and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results. Sarbanes-Oxley requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. Maintaining and, where necessary, enhancing our disclosure controls and procedures and internal control over financial reporting requires significant and continued investment of management time, employee resources, and financial resources, particularly as our business, product offerings, and organizational structure continue to evolve. If we do not devote sufficient resources to adapt our controls to these changes, or if attrition - including from restructuring activities - affects personnel who perform control-related functions, our disclosure controls and procedures or internal control over financial reporting could become less effective, requiring us to hire additional employees or engage outside consultants, which would increase our costs and expenses, and management's attention may be diverted from other business concerns, which could adversely affect our business and operating results.
We are required, pursuant to Section 404 of Sarbanes-Oxley (Section 404), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, is designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
This assessment needs to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting, as well as a statement that our independent registered public accounting firm has issued an opinion on the effectiveness of our internal control over financial reporting. Section 404(b) of the Sarbanes-Oxley Act requires our independent registered public accounting firm to annually attest to the effectiveness of our internal control over financial reporting, which has, and will continue to, require increased costs, expenses, and management resources. An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could lead us to restate our financial statements, which could cause investors to lose confidence in our reported financial information, have a negative effect on the
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trading price of our common stock, and result in additional costs to remediate such material weaknesses. We are required to disclose changes made in our internal control and procedures on a quarterly basis. To continue complying with the requirements of being a public company, we may need to undertake various actions from time to time, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff. If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm issues an adverse opinion on the effectiveness of our internal control, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause the price of our common stock to decline, and we may be subject to investigation or sanctions by the SEC. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE.
Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the U.S.
GAAP is subject to interpretation by the Financial Accounting Standards Board (FASB), the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported operating results and financial condition and could affect the reporting of transactions already completed before the announcement of a change.
If our estimates or judgments relating to our critical accounting policies prove to be incorrect, or if changes to such policies are not well-understood, our operating results could be adversely affected and the trading price of our common stock could decline.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Operating Results—Critical Accounting Estimates.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant estimates and judgments may involve the variable consideration used in revenue recognition for certain contracts, determination of useful lives of long-lived intangible assets, present value estimation of operating lease liabilities, the estimate of expected credit losses on accounts receivable, acquired card receivables and loans held for investment, accrual for rewards, inputs used to value certain stock-based compensation awards, benefit period to amortize deferred costs and valuation of income taxes. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our common stock. We may also choose to modify our accounting policies from time to time to better reflect management's view of our business operations, our assessment of comparable policies adopted by other companies in our industry, and evolving investor expectations. In the event of significant changes in our accounting policies, such as our change in accounting principle related to the presentation of rewards paid to spending businesses, the presentation of our operating results or financial condition could materially change, and any such changes could be viewed negatively or misunderstood by analysts and investors, which could cause volatility in the trading price of our common stock. Moreover, if regulators disagree with or challenge such changes, our business, operating results and financial condition could be adversely affected.
Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.
Market opportunity estimates and growth forecasts, including those we have generated ourselves, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The variables that go into the calculation of our market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of addressable users or companies covered by our market opportunity estimates will purchase our products at all or generate any particular level of revenue for us. Any expansion in the markets in which we operate depends on a number of factors, including the cost,
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performance, and perceived value associated with our platforms and those of our competitors. Even if the markets in which we compete meet the size estimates and growth forecasted, our business could fail to grow at similar rates, if at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Accordingly, our forecasts of market growth should not be taken as indicative of our future growth.
We rely on assumptions and estimates to calculate certain of our performance metrics, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.
We calculate and track certain customer and other performance metrics with internal tools, which are not independently verified by any third party. While we believe our metrics are reasonable estimates of our customer base and payment and transaction volumes for the applicable period of measurement, the methodologies used to measure these metrics require significant judgment and may be susceptible to algorithm or other technical errors. For example, the accuracy and consistency of our performance metrics may be impacted by changes to internal assumptions regarding how we account for and track customers, limitations on system implementations, and limitations on the ability of third-party tools to match our database. If the internal tools we use to track these metrics undercount or overcount performance or contain algorithmic or other technical errors, the data we report may not be accurate. In addition, limitations or errors with respect to how we measure data (or the data that we measure) may affect our understanding of certain details of our business, which could affect our longer-term strategies. Further, as our business develops, we may revise or cease reporting certain metrics if we determine that such metrics are no longer accurate or appropriate measures of our performance. If investors or the media perceive any changes to our metrics disclosures negatively, our business, financial condition and results of operations could be adversely affected. If our performance metrics are not accurate representations of our business, customer base, or payment or transaction volumes, if we discover material inaccuracies in our metrics, or if the metrics we rely on to track our performance do not provide an accurate measurement of our business, our reputation may be harmed, we may be subject to legal or regulatory actions, and our business, operating results, financial condition, and prospects could be adversely affected.
Any future litigation against us could be costly and time-consuming to defend.
We have in the past and may in the future become subject to legal proceedings and claims that arise in the ordinary course of business, such as claims brought by our customers in connection with commercial disputes, employment claims made by our current or former employees, or claims for reimbursement following misappropriation of customer data. Litigation might result in substantial costs and may divert management’s attention and resources, which might seriously harm our business, overall financial condition, and operating results. Insurance might not cover such claims, might not provide sufficient payments to cover all the costs to resolve one or more such claims, and might not continue to be available on terms acceptable to us. A claim brought against us that is uninsured or under-insured could result in unanticipated costs, thereby reducing our operating results and leading analysts or potential investors to reduce their expectations of our performance, which could reduce the trading price of our stock.
If we cannot maintain our company culture as we grow, our success and our business may be harmed.
We believe our culture has been a key contributor to our success to date and that the critical nature of the platform that we provide promotes a sense of greater purpose and fulfillment in our employees. Our recent RIFs, transition to a remote-first company, and other restructuring efforts could damage our corporate culture and decrease employee morale. In addition, inorganic growth through mergers and acquisitions may pose significant challenges to assimilating the company cultures of acquired companies. Any failure to preserve our culture could negatively affect our ability to retain and recruit personnel, which is critical to our growth, and to effectively focus on and pursue our corporate objectives. As we grow and continue to develop the infrastructure of a public company, we may find it difficult to maintain these important aspects of our culture. If we fail to maintain our company culture, our business and competitive position may be adversely affected.
We are exposed to foreign currency exchange risk relating to our Canadian operations.
We are exposed to foreign currency exchange risk relating to our Canadian operations and Canadian subsidiary. A change in foreign currency exchange rates, particularly in Canadian dollars to U.S. dollars, can
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affect our financial results due to transaction gains or losses related to the remeasurement of certain monetary asset and monetary liability balances that are denominated in currencies other than U.S. dollars, which is the functional currency of our Canadian subsidiary. In addition, we expect our exposure to foreign currency rate risks in the future to increase as our international operations increase.
Our business could be negatively affected as a result of actions by or proposals from activist stockholders, and such activism could impact the trading value of our securities and harm our business, financial condition and results of operations.
We have been and may continue to be subject to actions by or proposals from activist stockholders or others that may not align with our business strategies or the interests of our other stockholders. Responding to these actions or proposals can be costly and time consuming, disrupt our business and operations, and divert the attention of our Board of Directors, management and employees. For example, we have been and may continue to retain the services of various professionals to advise us on stockholder activism matters, including legal, financial and communications advisers, the costs of which may negatively impact our future financial results. Activist stockholders may create perceived uncertainties as to our future direction which may be exploited by our competitors and may make it more difficult to attract and retain qualified personnel and potential customers and partners and may affect our relationships with current customers, partners, vendors, investors, and other third parties. In addition, actions of activist stockholders may cause periods of fluctuation in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.
Risks Related to Government Regulation and Privacy Matters
Payments and other financial services-related regulations and oversight are material to our business. Our failure to comply could materially harm our business.
The local, state, and federal laws, rules, regulations, licensing requirements, and industry standards that govern our business include, or may in the future include, those relating to banking, deposit-taking, cross-border and domestic money transmission, foreign exchange, payments services (such as licensed money transmission, payment processing, and settlement services), lending, anti-money laundering, combating terrorist financing, escheatment, international sanctions regimes, and compliance with the Payment Card Industry Data Security Standard (PCI DSS), a set of requirements designed to ensure that all companies that process, store, or transmit payment card information maintain a secure environment to protect cardholder data. Our failure to comply with PCI DSS could result in fines, restrictions on our ability to accept payment cards, and reputational harm. In addition, PCI DSS is periodically updated, and we must invest resources to ensure ongoing compliance with evolving standards.
Several of our subsidiaries maintain licenses to operate in regulated businesses in U.S. states and Canada. Our subsidiary, Bill.com, LLC, maintains licenses, as applicable, to operate as a money transmitter (or its equivalent) in the U.S., the District of Columbia, the Commonwealth of Puerto Rico, and, to the best of our knowledge, in all the states where such licensure or registration is required for our business. In addition, our subsidiary, Bill.com Canada, LLC is a Foreign Money Services Business in Canada and the regulations applicable to our activity in Canada are enforced by FINTRAC, the Bank of Canada, and Quebec’s Financial Markets Authority. As a licensed money transmitter in the U.S., we are subject to obligations and restrictions with respect to the investment of customer funds, reporting requirements, bonding requirements, minimum capital requirements, and examinations by state and federal regulatory agencies concerning various aspects of our business. As a licensed Foreign Money Services business in Canada, we are subject to Canadian compliance regulations applicable to money movement and sanctions requirements.
In addition, our DivvyPay, LLC subsidiary and other subsidiaries of ours are required to maintain loan brokering, servicing or lending licenses in a number of U.S. states in which we conduct business and are contractually obligated to comply with federal consumer protection laws and regulations, applicable state laws, as well as card network rules as a card program manager for our BILL Divvy Card. These laws, rules, regulations, licensing schemes, and standards are enforced by multiple authorities and governing bodies in the U.S., including the Department of the Treasury, the Federal Trade Commission, the Consumer Financial Protection Bureau, the SEC, self-regulatory organizations, and numerous state and local agencies. As we expand into new jurisdictions, the number of foreign laws, rules, regulations, licensing schemes, and standards governing our business will expand as well. In addition, as our business and products continue to develop and
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expand, we may become subject to additional laws, rules, regulations, licensing schemes, and standards. We may not always be able to accurately predict the scope or applicability of certain laws, rules, regulations, licensing schemes, or standards to our business, particularly as we expand into new areas of operations, which could have a significant negative effect on our existing business and our ability to pursue future plans.
Evaluation of our compliance efforts in the U.S. and Canada, as well as questions as to whether and to what extent our products and services are considered money transmission, are matters of regulatory interpretation and could change over time. New products and features, such as AI agents that initiate or execute payments on behalf of our customers, may raise additional questions regarding how existing payments, authorization, and licensing requirements apply to our business. In the past, we have been subject to fines and other penalties by regulatory authorities for violations of state money transmission laws. Regulators and third-party auditors have also identified gaps in our anti-money laundering and sanctions program, which we have addressed through remediation processes. In the future, as a result of the regulations applicable to our business, we could be subject to investigations and resulting liability, including governmental fines, restrictions on our business, or other sanctions, and we could be forced to cease conducting certain aspects of our business with residents of certain jurisdictions, be forced to change our business practices in certain jurisdictions, or be required to obtain additional licenses or regulatory approvals. There can be no assurance that we will be able to obtain or maintain any such licenses, and, even if we were able to do so, there could be substantial costs and potential product changes involved in maintaining such licenses, which could have a material and adverse effect on our business. In addition, there are substantial costs and potential product changes involved in maintaining and renewing such licenses, certifications, and approvals, and we could be subject to fines or other enforcement action if we are found to violate disclosure, reporting, anti-money laundering, capitalization, corporate governance, or other requirements of such licenses. These factors could impose substantial additional costs, involve considerable delay to the development or provision of our products or services, require significant and costly operational changes, or prevent us from providing our products or services in any given market.
Government agencies may impose new or additional rules on money transmission, including regulations that:
•prohibit, restrict, and/or impose taxes or fees on money transmission transactions in, to, or from certain countries or with certain governments, individuals, and entities;
•impose additional customer and spending business identification and customer or spending business due diligence requirements;
•impose additional reporting or recordkeeping requirements, or require enhanced transaction monitoring;
•limit the types of entities capable of providing money transmission services, or impose additional licensing or registration requirements;
•impose minimum capital or other financial requirements;
•limit or restrict the revenue that may be generated from money transmission, including revenue from interest earned on customer funds, transaction fees, and revenue derived from foreign exchange;
•require enhanced disclosures to our money transmission customers;
•require the principal amount of money transmission originated in a country to be invested in that country or held in trust until paid;
•limit the number or principal amount of money transmission transactions that may be sent to or from a jurisdiction, whether by an individual or in the aggregate; and
•restrict or limit our ability to process transactions using centralized databases, for example, by requiring that transactions be processed using a database maintained in a particular country or region.
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Our business is subject to extensive government regulation and oversight. Our failure to comply with extensive, complex, overlapping, and frequently changing rules, regulations, and legal interpretations could materially harm our business.
Our success and increased visibility may result in increased regulatory oversight and enforcement and more restrictive rules and regulations that apply to our business. We are subject to a wide variety of local, state, federal, and international laws, rules, regulations, licensing schemes, and industry standards in the U.S. and in other countries in which we operate and in many of the countries in which our subsidiaries Invoice2go, LLC and Cimrid Pty, Ltd (together, Invoice2go) have subscribers. These laws, rules, regulations, licensing schemes, and standards govern numerous areas that are important to our business. In addition to the payments and financial services-related regulations, and the privacy, data protection, and information security-related laws described elsewhere in this "Risk Factors" section, our business is also subject to, without limitation, rules and regulations applicable to: securities, labor and employment, immigration, competition, and marketing and communications practices. Laws, rules, regulations, licensing schemes, and standards applicable to our business are subject to change and evolving interpretations and application, including by means of legislative changes and/or executive orders, and it can be difficult to predict how they may be applied to our business and the way we conduct our operations, particularly as we introduce new products and services and expand into new jurisdictions. We may not be able to respond quickly or effectively to regulatory, legislative, and other developments, and these changes may in turn impair our ability to offer our existing or planned features, products, and services and/or increase our cost of doing business. For example, the State of California has adopted new climate-related disclosure requirements, and, while certain requirements remain the subject of ongoing litigation, compliance with such rules requires significant effort and resources.
Although we have a compliance program focused on the laws, rules, regulations, licensing schemes, and industry standards that we have assessed as applicable to our business and we are continually investing more in this program, there can be no assurance that our employees or contractors will not violate such laws, rules, regulations, licensing schemes, and industry standards. Any failure or perceived failure to comply with existing or new laws, rules, regulations, licensing schemes, industry standards, or orders of any governmental authority (including changes to or expansion of the interpretation of those laws, regulations, standards, or orders), may:
•subject us to significant fines, penalties, criminal and civil lawsuits, license suspension or revocation, forfeiture of significant assets, audits, inquiries, whistleblower complaints, adverse media coverage, investigations, and enforcement actions in one or more jurisdictions levied by federal, state, local, or foreign regulators, state attorneys general, and private plaintiffs who may be acting as private attorneys general pursuant to various applicable federal, state, and local laws;
•result in additional compliance and licensure requirements;
•increase regulatory scrutiny of our business; and
•restrict our operations and force us to change our business practices or compliance program, make product or operational changes, or delay planned product launches or improvements.
The complexity of U.S. federal and state regulatory and enforcement regimes, coupled with the scope of our international operations and the evolving regulatory environment, could result in a single event giving rise to many overlapping investigations and legal and regulatory proceedings by multiple government authorities in different jurisdictions.
Further, in June 2024, the U.S. Supreme Court reversed its longstanding approach under the Chevron doctrine, which provided for judicial deference to regulatory agencies. As a result of this decision, we cannot be sure whether there will be increased challenges to existing agency regulations or how lower courts will apply the decision in the context of other regulatory schemes without more specific guidance from the U.S. Supreme Court. For example, the U.S. Supreme Court's decision could significantly impact consumer protection, advertising, privacy, artificial intelligence, anti-corruption and anti-money laundering practices and other regulatory regimes with which we are required to comply. Any such regulatory developments could result in uncertainty about and changes in the ways such regulations apply to us, and may require additional resources to ensure our continued compliance.
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Any of the foregoing could, individually or in the aggregate, harm our reputation as a trusted provider, damage our brands and business, cause us to lose existing customers, prevent us from obtaining new customers, require us to expend significant funds to remedy problems caused by breaches and to avert further breaches, expose us to legal risk and potential liability, and adversely affect our business, operating results, and financial condition.
We are subject to governmental regulation and other legal obligations, particularly those related to privacy, data protection, and information security, and our actual or perceived failure to comply with such obligations could harm our business, by resulting in litigation, fines, penalties, or adverse publicity and reputational damage that may negatively affect the value of our business and decrease the price of our common stock. Compliance with such laws could also result in additional costs and liabilities to us or inhibit sales of our products.
Our customers, their suppliers, and other users store personal and business information, financial information, and other sensitive information on our platform. In addition, we receive, store, and process personal and business information and other data from and about actual and prospective customers and users, in addition to our employees and service providers. Our handling of data is subject to a variety of laws and regulations, including regulation by various government agencies, such as the FTC, and various state, local, and foreign agencies. Our data handling also is subject to contractual obligations and industry standards.
The U.S. federal and various state and foreign governments have adopted or proposed limitations on the collection, distribution, use, and storage of data relating to individuals and businesses, including the use of contact information and other data for marketing, advertising, and other communications with individuals and businesses. In the U.S., various laws and regulations apply to the collection, processing, disclosure, and security of certain types of data, including the Gramm Leach Bliley Act (GLBA) and state laws relating to privacy and data security. GLBA requires financial institutions to explain their information sharing practices to their customers and to safeguard sensitive data. Additionally, the FTC and many state attorneys general are interpreting federal and state consumer protection laws as imposing standards for the online collection, use, dissemination, and security of data. For example, the California Consumer Privacy Act (CCPA), which broadly defines personal information, gives California residents expanded privacy rights and protections, including the right to opt out of certain personal information sharing, the use of “sensitive personal information,” and the use of personal information for automated decision-making or targeted advertising and provides for civil penalties for violations and a private right of action for data breaches. Additionally, over a third of U.S. states have enacted comprehensive consumer privacy laws, with several more states considering similar legislation. In addition, certain states have enacted laws specifically addressing biometric information, health data, and children's privacy that may apply to aspects of our business. Accordingly, the laws and regulations relating to privacy, data protection, and information security are evolving, can be subject to significant change, and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions.
In addition, several foreign countries and governmental bodies, including the European Union (EU) and the United Kingdom (UK), have laws and regulations dealing with the handling and processing of personal information, which in certain cases are more restrictive than those in the U.S. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure, and security of various types of data, including data that identifies or may be used to identify an individual, such as names, email addresses, and internet protocol addresses. Our current and prospective service offerings subject us to the GDPR, Australian and Canadian privacy laws (including the Personal Information Protection and Electronic Documents Act), and the privacy laws of many other foreign jurisdictions. Such laws and regulations may be modified or subject to new or different interpretations, and new laws and regulations may be enacted in the future.
For example, the GDPR imposes stringent operational requirements for controllers and processors of personal data of individuals within the European Economic Area and the UK, respectively, and non-compliance can trigger robust regulatory enforcement and fines of up to the greater of €20 million or 4% of the annual global revenues. Among other requirements, GDPR regulates transfers of personal data to third countries that have not been found to provide adequate protection to such personal data, including the United States. The efficacy and longevity of current transfer mechanisms between the EU or the UK and the United States remains uncertain. Violations of the GDPR may also lead to damages claims by data controllers and data subjects, in addition to civil litigation claims by data controllers, customers, and data subjects.
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The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting as a result of the rapidly evolving regulatory framework for privacy issues worldwide. For example, laws relating to the liability of providers of online services for activities of their users and other third parties are currently being tested by a number of claims, including actions based on invasion of privacy and other torts, unfair competition, copyright and trademark infringement, and other theories based on the nature and content of the materials searched, the ads posted, or the content provided by users. Moreover, the evolving use of AI in processing personal data raises novel privacy questions regarding algorithmic transparency, automated decision-making, and data minimization that may result in new regulatory requirements or enforcement actions. As a result of the laws that are or may be applicable to us, and due to the sensitive nature of the information we collect, we have implemented policies and procedures to preserve and protect our data and our customers’ data against loss, misuse, corruption, misappropriation caused by systems failures, or unauthorized access. If our policies, procedures, or measures relating to privacy, data protection, information security, marketing, or customer communications fail to comply with laws, regulations, policies, legal obligations, or industry standards, we may be subject to governmental enforcement actions, litigation, regulatory investigations, fines, penalties, and negative publicity, and it could cause our application providers, customers, and partners to lose trust in us, and have an adverse effect on our business, operating results, and financial condition.
In addition to government regulation, privacy advocates and industry groups may propose new and different self-regulatory standards that may apply to us. Because the interpretation and application of privacy, data protection and information security laws, regulations, rules, and other standards are still uncertain, it is possible that these laws, rules, regulations, and other actual or alleged legal obligations, such as contractual or self-regulatory obligations, may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the functionality of our platform. If so, in addition to the possibility of fines, lawsuits, and other claims, we could be required to fundamentally change our business activities and practices or modify our software, which could have an adverse effect on our business.
Any failure or perceived failure by us to comply with laws, regulations, policies, legal or contractual obligations, industry standards, or regulatory guidance relating to privacy, data protection, or information security, may result in governmental investigations and enforcement actions, litigation, fines and penalties, or adverse publicity, and could cause our customers and partners to lose trust in us, which could have an adverse effect on our reputation and business. Recent enforcement trends indicate that regulatory authorities are imposing increasingly significant penalties for privacy and data security violations. We expect that there will continue to be new proposed laws, regulations, and industry standards relating to privacy, data protection, information security, marketing, and consumer communications, and we cannot determine the impact such future laws, regulations, and standards may have on our business. Future laws, regulations, standards, and other obligations or any changed interpretation of existing laws or regulations could impair our ability to develop and market new functionality and maintain and grow our customer base and increase revenue. Future restrictions on the collection, use, sharing, or disclosure of data, or additional requirements for express or implied consent of our customers, partners, or users for the use and disclosure of such information, including for AI-related purposes, could require us to incur additional costs or modify our platform, possibly in a material manner, and could limit our ability to develop new functionality.
If we are not able to comply with these laws or regulations, or if we become liable under these laws or regulations, our business, financial condition, or reputation could be harmed, and we may be forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources or to discontinue certain products, which would negatively affect our business, financial condition, and operating results. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise adversely affect the growth of our business. Furthermore, any costs incurred as a result of this potential liability could harm our operating results.
We, our partners, our customers, and others who use our services obtain and process a large amount of sensitive data. Any real or perceived improper or unauthorized use of, disclosure of, or access to such data could harm our reputation as a trusted brand and adversely affect our business, operating results, and financial condition.
We, our partners, our customers, and the third-party vendors and data centers that we use, obtain and process large amounts of sensitive data, including data related to our customers and their transactions, as well
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as other data of the counterparties to their payments. We face risks, including to our reputation as a trusted brand, in the handling and protection of this data, and these risks will increase as our business continues to expand to include new products and technologies.
Cybersecurity incidents and malicious internet-based activity continue to increase generally, and providers of cloud-based services have frequently been targeted by such attacks. These cybersecurity challenges, including threats to our own information technology infrastructure or those of our customers or third-party providers, may take a variety of forms ranging from stolen bank accounts, business email compromise, customer employee fraud, account takeover, check fraud, or cybersecurity attacks, to “mega breaches” targeted against cloud-based services and other hosted software, which could be initiated by individual or groups of hackers or sophisticated cyber criminals. In addition, the increasing sophistication of AI-enabled cyberattacks, including AI-generated phishing, deepfakes, and adaptive malware, may make it more difficult to detect and prevent such attacks. State-sponsored cybersecurity attacks on the U.S. financial system or U.S. financial service providers could also adversely affect our business, including attacks that may be related to recent geopolitical conflicts in Iran and Ukraine or elsewhere. A cybersecurity incident or breach could result in disclosure of confidential information and intellectual property, or cause production downtimes and compromised data. We have in the past experienced cybersecurity incidents of limited scale. We may be unable to anticipate or prevent techniques used in the future to obtain unauthorized access or to sabotage systems because they change frequently and often are not detected until after an incident has occurred. As we increase our customer base and our brand becomes more widely known and recognized, third parties may increasingly seek to compromise our security controls or gain unauthorized access to our sensitive corporate information or our customers’ data.
We have administrative, technical, and physical security measures in place, and we have policies and procedures in place to contractually require service providers to whom we disclose data to implement and maintain reasonable privacy, data protection, and information security measures. However, if our privacy protection, data protection, or information security measures or those of the previously mentioned third parties are inadequate or are breached as a result of third-party action, employee or contractor error, malfeasance, malware, phishing, hacking attacks, system error, software bugs, or defects in our products, supply chain compromise, social engineering, trickery, process failure, or otherwise, and, as a result, there is improper disclosure of, or someone obtains unauthorized access to or exfiltrates funds or sensitive information, including personally identifiable information, financial account information, or payment card data, on our systems or our partners’ systems, or if we suffer a ransomware or advanced persistent threat attack, or if any of the foregoing is reported or perceived to have occurred, our reputation and business could be damaged. Recent high-profile security breaches and related disclosures of sensitive data by large institutions suggest that the risk of such events is significant, even if privacy, data protection, and information security measures are implemented and enforced. If sensitive information is lost or improperly disclosed or threatened to be disclosed, we could incur significant costs associated with remediation, notification to affected individuals and the implementation of additional security measures, may incur significant liability and financial loss, and be subject to regulatory scrutiny, investigations, proceedings, and penalties.
U.S. regulators, including the FTC and the SEC, have adopted or proposed enhanced cyber risk management standards that would apply to us and our financial institution partners and that would address cyber risk governance and management, management of internal and external dependencies, and incident response, cyber resilience, and situational awareness. In addition, financial regulators have implemented cybersecurity requirements applicable to financial services companies, including requirements related to cybersecurity programs, risk assessments, access controls, and incident notification. Legislation and regulations on cybersecurity, data privacy and data localization may compel us to enhance or modify our systems, invest in new systems, or alter our business practices or our policies on data governance and security. If any of these outcomes were to occur, our operational costs could increase significantly. Failure to comply with applicable laws in this area could also result in significant fines, penalties, and reputational damage.
In addition, our financial institution partners conduct regular audits of our cybersecurity program, and if any of them were to conclude that our systems and procedures are insufficiently rigorous, they could terminate their relationships with us, and our financial results and business could be adversely affected. Under our terms of service and our contracts with certain partners, if there is a breach of payment information that we store, we could be liable to the partner for their losses and related expenses. Additionally, if our own confidential business information were improperly disclosed, our business could be materially and adversely affected. A core aspect
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of our business is the reliability and security of our platform. Any perceived or actual breach of security, regardless of how it occurs or the extent of the breach, could have a significant impact on our reputation as a trusted brand, cause us to lose existing partners or other customers, prevent us from obtaining new partners and other customers, require us to expend significant funds to remedy problems caused by breaches and implement measures to prevent further breaches, and expose us to legal risk and potential liability including those resulting from governmental or regulatory investigations, class action litigation, and costs associated with remediation, such as fraud monitoring and forensics. Any actual or perceived security breach at a company providing services to us or our customers could have similar effects. Further, as the ensuing adoption of remote work has resulted in a significant number of people working from home, these cybersecurity risks may be heightened by an increased attack surface across our business and those of our partners and service providers. We have heightened monitoring in the face of such risks, but cannot guarantee that our efforts, or the efforts of those upon whom we rely and partner with, will be successful in preventing any such information security incidents.
As a company that facilitates financial transactions and maintains customer funds, we may also be an attractive target for ransomware attacks. Ransomware attacks have become increasingly sophisticated and prevalent, and threat actors may seek to extort payment by encrypting our systems or threatening to disclose sensitive customer data. A successful ransomware attack could result in significant operational disruption, data loss, ransom payments, remediation costs, regulatory scrutiny, litigation, and reputational harm.
While we maintain cybersecurity insurance, our insurance may be insufficient or may not cover all liabilities incurred by such attacks. We also cannot be certain that our insurance coverage will be adequate for data handling or data security liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our business, operating results, financial condition, and reputation.
We are subject to governmental laws and requirements regarding economic and trade sanctions, anti-money laundering, and counter-terror financing that could impair our ability to compete in international markets or subject us to criminal or civil liability if we violate them.
Although we currently only offer our payment and card products to customers in the U.S., UK, and Canada, Invoice2go has international subscribers in many countries, including Australia and several EU countries, for which payment activity is conducted through third-party payment providers. As we continue to expand internationally, we will become subject to additional laws and regulations, and will need to implement new regulatory controls to comply with applicable laws. We are currently required to comply with U.S. economic and trade sanctions administered by OFAC and we have processes in place to comply with the OFAC regulations as well as similar requirements in other jurisdictions, including the Australian Sanctions Regime, the Canadian Proceeds of Crime and Terrorist Financing Act, the UK Office of Financial Sanctions Implementation and, to the extent we expand our offerings into the EU, EU money laundering directives. As part of our compliance efforts, we scan our customers and payments against OFAC and other watch lists and have controls to monitor and mitigate these risks. If our services are accessed from a sanctioned country in violation of the trade and economic sanctions, we could be subject to fines or other enforcement action. For example, we previously identified gaps in our IP address blocking controls and believe that certain U.S. domestic payments were made through our platform by U.S. customers while traveling in sanctioned countries. In addition, we identified that one of our acquired subsidiaries, Zipbooks, onboarded and received a limited amount of subscription payments from certain subscribers potentially located in sanctioned countries. In March 2024, we submitted a voluntary self-disclosure to OFAC related to these issues and, in November 2024, OFAC completed its review and issued us a cautionary letter. We have implemented additional controls and screening tools designed to prevent similar activity from occurring in the future, but there can be no assurance that we will not encounter similar issues with our sanctions compliance processes in the future. If we are found to have failed to comply with U.S. sanctions laws, we could be subject to certain penalties, including monetary fines, as well as reputational harm. We are also subject to various anti-money laundering and counter-terrorist financing laws and regulations in the U.S. and Canada, and around the world that prohibit, among other things, our involvement in transferring the proceeds of criminal activities.
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In the United States, most of our services are subject to anti-money laundering laws and regulations, including the Bank Secrecy Act (the BSA), the Anti-Money Laundering Act of 2020, and similar state laws and regulations. The BSA requires, among other things, money services businesses (known as MSBs) to develop and implement risk-based anti-money laundering programs, to report suspicious activity, and in some cases, to collect and maintain information about customers who use their services and maintain other transaction records. Regulators in the United States, Canada, and in many other foreign jurisdictions continue to increase their scrutiny of compliance with these obligations, which may require us to further revise or expand our compliance program, including the procedures we use to verify the identity of our customers and to monitor transactions on our system, including payments to persons outside of the U.S. and Canada. Regulators regularly re-examine the transaction volume thresholds at which we must obtain and keep applicable records or verify identities of customers, and any change in such thresholds could result in greater costs for compliance.
We are subject to anti-corruption, anti-bribery, and similar laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business.
We are subject to the FCPA, U.S. domestic bribery laws, and other anti-corruption laws, including Australia’s anti-bribery laws, the Canadian Criminal Code, the Canadian Corruption of Foreign Public Officials Act and the UK Bribery Act 2010. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, and their third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public sector. These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. Although we currently only offer our payment and card products to customers in the U.S., and payment services in Canada and the United Kingdom, Invoice2go has international subscribers in many countries, including Australia and several EU countries for which payment activity is conducted through third-party payment providers. As we increase our international cross-border business and expand operations abroad, we may engage with business partners and third-party intermediaries to market our services and obtain necessary permits, licenses, and other regulatory approvals. In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities.
We cannot assure you that all of our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. As we increase our international business, our risks under these laws may increase.
Detecting, investigating, and resolving actual or alleged violations of anti-corruption laws can require a significant diversion of time, resources, and attention from senior management. In addition, noncompliance with anti-corruption or anti-bribery laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties, injunctions, suspension or debarment from contracting with certain persons, reputational harm, adverse media coverage, and other collateral consequences. If any subpoenas are received or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal proceeding, our business, operating results, and financial condition could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.
Risks Related to Our Intellectual Property
If we fail to adequately protect our proprietary rights, our competitive position could be impaired and we may lose valuable assets, generate less revenue, and incur costly litigation to protect our rights.
Our success is dependent, in part, upon protecting our proprietary technology. We rely on a combination of patents, copyrights, trademarks, service marks, trade secret laws, and contractual provisions to establish and protect our proprietary rights. However, the steps we take to protect our intellectual property may be inadequate. While we have been issued patents in the U.S. and have additional patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications. In addition, any patents issued in the future may not provide us with competitive advantages or may be successfully
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challenged by third parties. Any of our patents, trademarks, or other intellectual property rights may be challenged or circumvented by others or invalidated through administrative process or litigation. There can be no guarantee that others will not independently develop similar products, duplicate any of our products, or design around our patents. Furthermore, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create products and services that compete with ours.
We have been in the past, and may in the future be, subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business.
We have been in the past and may in the future become subject to intellectual property disputes. Lawsuits are time-consuming and expensive to resolve and they divert management’s time and attention. Although we carry insurance, our insurance may not cover potential claims of this type or may not be adequate to indemnify us for all liability that may be imposed. We cannot predict the outcome of lawsuits and cannot assure you that the results of any such actions will not have an adverse effect on our business, operating results, or financial condition.
The software industry is characterized by the existence of many patents, copyrights, trademarks, trade secrets, and other intellectual and proprietary rights. Companies in the software industry are often required to defend against litigation claims based on allegations of infringement or other violations of intellectual property rights. Our technologies may not be able to withstand any third-party claims against their use. In addition, many companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them. Any litigation may also involve patent holding companies or other adverse patent owners that have no relevant product revenue, and therefore, our patents may provide little or no deterrence as we would not be able to assert them against such entities or individuals. If a third party is able to obtain an injunction preventing us from accessing such third-party intellectual property rights, or if we cannot license or develop alternative technology for any infringing aspect of our business, we would be forced to limit or stop sales of our software or cease business activities related to such intellectual property. Any inability to license third-party technology in the future would have an adverse effect on our business or operating results and would adversely affect our ability to compete. We may also be contractually obligated to indemnify our customers in the event of infringement of a third party’s intellectual property rights. Responding to such claims, regardless of their merit, can be time consuming, costly to defend, and damaging to our reputation and brand.
Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, data protection, and other losses.
Our agreements with financial institution partners and some larger customers include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, data protection, damages caused by us to property or persons, or other liabilities relating to or arising from our platform or other contractual obligations. Some of these indemnity agreements provide for uncapped liability and some indemnity provisions survive termination or expiration of the applicable agreement. Large indemnity payments could harm our business, operating results, and financial condition. Although we normally limit our liability with respect to such obligations in our contracts with direct customers and with customers acquired through our accounting firm partners, we may still incur substantial liability, and we may be required to cease use of certain functions of our platform or products, as a result of intellectual property-related claims. Any dispute with a customer with respect to these obligations could have adverse effects on our relationship with that customer and other existing or new customers, and harm our business and operating results. In addition, although we carry insurance, our insurance may not be adequate to indemnify us for all liability that may be imposed, or otherwise protect us from liabilities or damages with respect to claims alleging compromises of customer data, and any such coverage may not continue to be available to us on acceptable terms or at all.
We use open source software in our products, which could subject us to litigation or other actions.
We use open source software in our products. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate it into their products. As a result, we
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could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition, or require us to devote additional research and development resources to change our products. In addition, if we were to combine our proprietary software products with open source software in a certain manner under certain open source licenses, we could be required to release the source code of our proprietary software products. If we inappropriately use or incorporate open source software subject to certain types of open source licenses that challenge the proprietary nature of our products, we may be required to re-engineer such products, discontinue the sale of such products, or take other remedial actions.
Risks Related to Our Indebtedness
Our debt service obligations, including the Notes, may adversely affect our financial condition and results of operations.
As of September 30, 2026, we had outstanding $123.5 million aggregate principal amount of 0% convertible senior notes due April 1, 2027 (the 2027 Notes), and $1.4 billion aggregate principal amount of 0% convertible senior notes due April 1, 2030 (the 2030 Notes, and together with the 2027 Notes, the Notes) and had drawn $330.0 million under our Revolving Credit Facilities, as described in Note 7 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Our ability to make payments of the principal of, to pay interest on, or to refinance our indebtedness, including the Notes and our Revolving Credit Facilities, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. Moreover, our obligations under the Revolving Credit Facilities are secured by our BILL Divvy Card receivables and certain other collateral, and subject to a limited guarantee by BILL Holdings, Inc. Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive. Our ability to refinance any future indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. In addition, any of our future debt agreements may contain restrictive covenants that may prohibit us from adopting any of these alternatives. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of our debt.
In addition, our indebtedness, combined with our other financial obligations and contractual commitments, could have other important consequences. For example, it could:
•make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry, and competitive conditions and adverse changes in government regulation;
•limit our flexibility in planning for, or reacting to, changes in our business and our industry;
•place us at a disadvantage compared to our competitors who have less debt;
•limit our ability to borrow additional amounts to fund acquisitions, for working capital, and for other general corporate purposes; and
•make an acquisition of our company less attractive or more difficult.
Any of these factors could harm our business, operating results, and financial condition. In addition, if we incur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase. We are also required to comply with the covenants set forth in the indentures governing the Notes. Our ability to comply with these covenants may be affected by events beyond our control. If we breach any of the covenants and do not obtain a waiver from the note holders or lenders, then, subject to applicable cure periods, any outstanding indebtedness may be declared immediately due and payable. In addition, changes by any rating agency to our credit rating may negatively impact the value and liquidity of our securities. Downgrades in our credit ratings could restrict our ability to obtain additional financing in the future and could affect the terms of any such financing.
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We may not have the ability to raise the funds necessary for cash settlement upon conversion of the Notes or to repurchase the Notes for cash upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion of the Notes or to repurchase the Notes.
Holders of the Notes have the right to require us to repurchase their notes upon the occurrence of a fundamental change (as defined in each of the indentures governing the Notes) at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid special interest, if any. In addition, upon conversion of the Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of the Notes surrendered or the Notes being converted. In addition, our ability to repurchase the Notes or to pay cash upon conversions of the Notes may be limited by law, by regulatory authority, or by agreements governing our future indebtedness.
In addition to the Notes, we and our subsidiaries may incur substantial additional debt in the future, subject to the restrictions contained in our current and future debt instruments, some of which may be secured debt. We are not restricted under the terms of the indentures governing the Notes from incurring additional debt, securing existing or future debt, recapitalizing our debt, or taking a number of other actions that could have the effect of diminishing our ability to make payments on the Notes when due.
Our failure to repurchase the Notes at a time when the repurchase is required by the applicable indenture or to pay any cash payable on future conversions of the Notes as required by such indenture would constitute a default under that indenture. A default under one of the indentures or the fundamental change itself could also lead to a default under the other indenture or other agreements governing our existing or future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversions thereof.
The conditional conversion feature of the Notes, when triggered, may adversely affect our financial condition and operating results.
Prior to the close of business on the business day immediately preceding January 1, 2027, in the case of the 2027 Notes, and January 1, 2030, in the case of the 2030 Notes, the holders of the applicable Notes may elect to convert their Notes during any calendar quarter (and only during such calendar quarter) if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day (the Conversion Condition). The Conversion Condition for the 2027 Notes and 2030 Notes was not triggered as of September 30, 2026. In the event the Conversion Condition is triggered for one or more series of Notes, holders of such Notes will be entitled to convert their Notes at any time during specified periods at their option. If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
The Capped Calls may affect the value of our Notes and our common stock.
In connection with the sale of each of the 2027 Notes and the 2030 Notes, we entered into privately negotiated Capped Call transactions (collectively, the Capped Calls) with certain financial institutions (the option counterparties). The Capped Call transactions are designed to reduce the potential dilution upon conversion of the Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap.
The option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our
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common stock or other securities of ours in secondary market transactions prior to the maturity of the applicable series of Notes (and are likely to do so following any conversion, repurchase, or redemption of each of the 2027 Notes and 2030 Notes, to the extent we exercise the relevant election under the Capped Calls). This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the Notes, which could affect note holders’ ability to convert the Notes and, to the extent the activity occurs during any observation period related to a conversion of the Notes, it could affect the number of shares and value of the consideration that note holders will receive upon conversion of the Notes.
We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of the Notes or our common stock. In addition, we do not make any representation that the option counterparties will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.
We are subject to counterparty risk with respect to the Capped Calls.
The option counterparties are financial institutions, and we are subject to the risk that any or all of them might default under the Capped Calls. Our exposure to the credit risk of the option counterparties will not be secured by any collateral. Past global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under the Capped Calls with such option counterparty. Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the market price and in the volatility of our common stock. In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurance as to the financial stability or viability of the option counterparties.
Risks Related to Ownership of Our Common Stock
The stock price of our common stock has been, and will likely continue to be volatile, and you may lose part or all of your investment.
The market for our common stock has been, and will likely continue to be, volatile. In addition to the factors discussed in this report, the market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
•overall performance of the equity markets;
•actual or anticipated fluctuations in our revenue and other operating results;
•changes in the financial projections we may provide to the public or our failure to meet these projections;
•changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
•recruitment or departure of key personnel;
•the economy as a whole and market conditions in our industry, such as inflation and high interest rate and recessionary environments;
•negative publicity related to the real or perceived quality of our platform, as well as the failure to timely launch new products and services that gain market acceptance;
•rumors and market speculation involving us or other companies in our industry;
•announcements by us or our competitors of new products or services, commercial relationships, or significant technical innovations, including with respect to our and our competitors' agentic and other AI offerings;
•acquisitions, partnerships, joint ventures, capital commitments, or other strategic transactions;
•new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
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•lawsuits threatened or filed against us, litigation involving our industry, or both;
•developments or disputes concerning our or other parties’ products, services, or intellectual property rights;
•changes in accounting standards, policies, guidelines, interpretations, or principles;
•interpretations of any of the above or other factors by trading algorithms, including those that employ natural language processing and related methods to evaluate our public disclosures;
•other events or factors, including those resulting from war or other geopolitical conflicts, incidents of terrorism, or responses to these events;
•actual or perceived instability in the U.S. and global banking systems; and
•sales of shares of our common stock by us or our stockholders.
In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies, and technology companies in particular, have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business. Further, volatility or a lack of positive performance in our stock price may adversely affect our ability to retain key employees, many of whom have been granted equity incentive awards.
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management, and affect the market price of our common stock.
Provisions in our amended and restated certificate of incorporation and second amended and restated bylaws may have the effect of delaying or preventing a change of control or changes in our management. Our amended and restated certificate of incorporation and second amended and restated bylaws include provisions that:
•authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock;
•require that any action to be taken by our stockholders be affected at a duly called annual or special meeting and not by written consent;
•specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, or our chief executive officer;
•establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors;
•establish that our board of directors is divided into three classes, with each class serving three-year staggered terms;
•prohibit cumulative voting in the election of directors;
•provide that our directors may be removed for cause only upon the vote of sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock;
•provide that vacancies on our board of directors may be filled only by a majority vote of directors then in office, even though less than a quorum; and
•require the approval of our board of directors or the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock to amend our bylaws and certain provisions of our certificate of incorporation.
In addition, our amended and restated certificate of incorporation and our second amended and restated bylaws provide that the Court of Chancery of the State of Delaware, to the fullest extent permitted by
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law, will be the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law (the DGCL), our amended and restated certificate of incorporation, or our second amended and restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine. These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. These exclusive forum provisions will not apply to claims that are vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery of the State of Delaware, or for which the Court of Chancery of the State of Delaware does not have subject matter jurisdiction. For instance, these provisions would not preclude the filing of claims brought to enforce any liability or duty created by the Exchange Act or Securities Act of 1933, as amended (the Securities Act), or the rules and regulations thereunder in federal court.
Moreover, Section 203 of the DGCL may discourage, delay, or prevent a change in control of our company. Section 203 imposes certain restrictions on mergers, business combinations, and other transactions between us and holders of 15% or more of our common stock.
We do not intend to pay dividends for the foreseeable future.
We have never declared or paid any cash dividends on our capital stock, and we do not intend to pay any cash dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, our stock price and trading volume could decline.
Our stock price and trading volume is heavily influenced by the way analysts and investors interpret our financial information and other disclosures. If securities or industry analysts do not publish research or reports about our business, downgrade our common stock, or publish negative reports about our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our stock price to decline and could decrease the trading volume of our common stock.
Sales of substantial amounts of our common stock in the public markets, particularly sales by our directors, executive officers, and significant stockholders, or the perception that these sales could occur, could cause the market price of our common stock to decline and may make it more difficult for you to sell your common stock at a time and price that you deem appropriate.
The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market. The perception that these sales might occur may also cause the market price of our common stock to decline. We had a total of 85,869,963 shares of our common stock outstanding as of September 30, 2026. All shares of our common stock are either freely tradable, generally without restrictions or further registration under the Securities Act, or have been registered for resale under the Securities Act by us, subject to certain exceptions for shares held by our “affiliates” as defined in Rule 144 under the Securities Act.
In addition, we have filed registration statements on Form S-8 to register shares reserved for future issuance under our equity compensation plans. Subject to the satisfaction of vesting conditions, the shares issued upon exercise of outstanding stock options or settlement of outstanding restricted stock units will be available for immediate resale in the United States in the open market.
In addition, we have in the past, and may in the future, issue our shares of common stock or securities convertible into or exercisable for our common stock from time to time in connection with financings, acquisitions, investments, partnerships or otherwise. We also expect to grant additional equity awards to employees and directors under our 2019 Equity Incentive Plan and rights to purchase our common stock under our 2019 Employee Stock Purchase Plan. Any such issuances could result in substantial dilution to our existing stockholders and cause the trading price of our common stock to decline.
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The timing and amount of any repurchases of common stock by us are subject to a number of uncertainties.
In May 2026, we announced that our board of directors authorized the repurchase of up to $1.0 billion in shares of our outstanding common stock, which authorization includes unused amounts under a previously-authorized program. Pursuant to this authorization, we may purchase such shares from time to time, using a variety of methods, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans, in compliance with the rules of the SEC and other applicable legal requirements. For additional discussion about our share repurchase program activity during the period and shares available for future repurchases, refer to Note 8 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
The Inflation Reduction Act, enacted on August 16, 2022, among other things, imposes a 1% non-deductible, excise tax on net repurchases of shares by U.S. corporations whose stock is traded on an established securities market. Although we do not currently expect such excise taxes to be material to us due to our anticipated issuance of common stock, any excise tax applicable to the repurchase programs described above, may increase the cost of such repurchases and may cause us to reduce the number of shares repurchased.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Purchase of Equity Securities by the Issuer
In May 2026, we announced that our board of directors authorized the repurchase of up to $1.0 billion in shares of our outstanding common stock, which authorization includes unused amounts under the August 2025 Share Repurchase Program (the 2026 Share Repurchase Authorization). Pursuant to this authorization, we may repurchase such shares from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. This authorization has a term of 24 months, may be suspended, discontinued or modified at any time, and does not obligate us to acquire any amount of common stock.
The following table provides shares repurchase activity during the three months ended September 30, 2026:
| Period | Total number of shares purchased (in thousands) (1) (2) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs (in thousands) (1) (2) | Approximate dollar value of shares that may yet be purchased under the plans or programs (in thousands) (1) (2) | |||||||||||||||||||
| July 1, 2026 - July 31, 2026 | 5,133 | $ | 42.85 | 5,133 | $ | 482,215 | |||||||||||||||||
| August 1, 2026 - August 31, 2026 | 1,706 | $ | 48.20 | 1,706 | $ | 400,005 | |||||||||||||||||
| September 1, 2026 - September 30, 2026 | — | $ | — | — | $ | 400,005 | |||||||||||||||||
| Total | 6,839 | 6,839 | |||||||||||||||||||||
(1) See Note 8 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
(2) Represents repurchases and then-remaining amounts under our 2026 Share Repurchase Authorization.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
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ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Trading Arrangements
ITEM 6. EXHIBITS
| Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||
| Exhibit Number | Description | Form | File No. | Exhibit Number | Filing Date | Filed Herewith | ||||||||||||||||||||||||||||||||
| 18.1 | X | |||||||||||||||||||||||||||||||||||||
| 31.1 | X | |||||||||||||||||||||||||||||||||||||
| 31.2 | X | |||||||||||||||||||||||||||||||||||||
| 32.1* | X | |||||||||||||||||||||||||||||||||||||
| 32.2* | X | |||||||||||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document | X | ||||||||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | X | ||||||||||||||||||||||||||||||||||||
*The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| November 5, 2026 | By: | /s/ René Lacerte | |||||||||
| (Date) | René Lacerte | ||||||||||
| Chief Executive Officer | |||||||||||
| (Principal Executive Officer) | |||||||||||
| November 5, 2026 | By: | /s/ Rohini Jain | |||||||||
| (Date) | Rohini Jain | ||||||||||
Chief Financial Officer | |||||||||||
(Principal Financial Officer and Principal Accounting Officer) | |||||||||||
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Exhibit 18.1
Board of Directors
BILL Holdings, Inc.
6220 America Center Drive, Suite 100
San Jose, CA 95002
Dear Directors:
We are providing this letter to you for inclusion as an exhibit to BILL Holdings Inc’s (the “Company”) Quarterly Report on Form 10-Q for the period ended September 30, 2026 (the “Form 10-Q”) pursuant to Item 601 of Regulation S-K.
We have been provided a copy of the Company’s Form 10-Q. Note 1 therein describes a change in accounting principle for the Company’s presentation of rewards paid to spending businesses using its card products from sales and marketing expense within operating expenses to a reduction of interchange revenue within subscription and transaction fees. It should be understood that the preferability of one acceptable method of accounting over another for presentation of rewards issued to cardholders in the scope of Accounting Standards Codification 310-20, Receivables—Nonrefundable Fees and Other Costs, has not been addressed in any authoritative accounting literature, and in expressing our concurrence below we have relied on management’s determination that this change in accounting principle is preferable. Based on our reading of management’s stated reasons and justification for this change in accounting principle in the Form 10-Q, and our discussions with management as to their judgment about the relevant business planning factors relating to the change, we concur with management that such change represents, in the Company’s circumstances, a change to a preferable accounting principle in conformity with Accounting Standards Codification 250, Accounting Changes and Error Corrections.
We have not audited any financial statements of the Company as of any date or for any period subsequent to June 30, 2026. Accordingly, our comments are subject to change upon completion of an audit of the financial statements covering the period of the accounting change.
Very truly yours,
/s/ PricewaterhouseCoopers LLP
San Jose, California
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULE 13a-14(a) OR 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, René Lacerte, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of BILL Holdings, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: | November 5, 2026 | |||||||
| BILL Holdings, Inc. | |||||
| /s/ René Lacerte | |||||
| René Lacerte | |||||
| Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULE 13a-14(a) OR 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Rohini Jain, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of BILL Holdings, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: | November 5, 2026 | |||||||
| BILL Holdings, Inc. | |||||
/s/ Rohini Jain | |||||
| Rohini Jain | |||||
Chief Financial Officer | |||||
(Principal Financial Officer and Principal Accounting Officer) | |||||
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, René Lacerte, Chief Executive Officer of BILL Holdings, Inc. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1.The Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended September 30, 2026 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company.
| Date: | November 5, 2026 | |||||||
| BILL Holdings, Inc. | |||||
| /s/ René Lacerte | |||||
| René Lacerte | |||||
| Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Rohini Jain, Chief Financial Officer of BILL Holdings, Inc. (the Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1.The Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended September 30, 2026 (the "Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company.
| Date: | November 5, 2026 | |||||||
| BILL Holdings, Inc. | |||||
/s/ Rohini Jain | |||||
| Rohini Jain | |||||
Chief Financial Officer | |||||
(Principal Financial Officer and Principal Accounting Officer) | |||||