BILL Holdings, Inc. (BILL) June 3, 2026 Conference Transcript

Good morning, everyone. My name is Tomer Zilberman, and I lead the back office applications and vertical software coverage here at Bank of America. Today, I'm joined by Rohini Jain, CFO of Bill. Rohini, thank you for joining us. Rohini, I want to start off with a very high-level question, maybe for investors that are newer to the story. First, talk about Bill, what you guys do, and in the world of AI and agentic, what is Bill's value proposition in all of that?

Yeah, great question and something we talk about and think about a lot. So what does Bill do? Bill started out about 20 years ago with our founder, Renee, trying to build a software to simplify the back office operations for the SMBs. So SMBs could focus on growth of their business, doing what they want to do, and take away the friction of managing the paperwork and the workflows and approvals and financial management basic. That's how it started out and over time we continued to add feature functionality and products to it. The next thing was building out a payments platform where we could then enable not only the financial operations but also financial transactions. What that led to was building out a regulatory infrastructure and a large set of data that understands risk and understands the customers and the suppliers and collects a bunch of data about very close-loop transactions where you know even before the transaction there's a lot of companies who enable transactions only have just the transaction data we are in the workflow so we know what happens before that we understand the cash flow situation so we can actually help the SMBs manage their payments in a certain way and which type of payments when to make it etc so what we do really can enable the SMBs to focus on growth versus dealing with the back-end operations payments and all of that stuff so that's primarily what Bill does and how we are positioned in the AI world and I just talked about our data and the trust that the customers have and we move a lot of money almost a percentage of decent GDP of the US we talk about that a lot as well so that has enabled us to build a lot of trust we have built a lot of regulatory muscle that enables us to do all of that in a very efficient and accurate way and if you build out an experience that is AI first or AI native you know you could take out a lot of friction what Renee talks about our founder and CEO talks up talks about a lot is we were on this journey of helping SMBs do their work we We were doing the work with them and now we are able to do it for them. So we are building those capabilities where we are not only automating tasks and simplifying tasks, but simplifying jobs or building out agents capabilities and everything that will reduce the number of jobs that SMBs need to do and that's where the real value for them comes through actually money back in their pocket that they can actually spend on growth. so that's that's our next pivot here and you know we made some big announcements during our earnings call this time we leaned out our organization quite materially we are you know we also announced a couple of weeks ago that we are changing some of the leadership at the top as well all of those changes are really going to help us drive velocity and execution in this vision of AI native the data we have the trust we have the leg regulatory framework we have and the integration of the software where we simply do things for SMBs on the financial operation side and enable payments seamlessly when and how taking out some of that decision-making, helping them manage cash flow and such. That's where we can make a step change with the AI-led experiences.

Got it.

Could you actually remind us of the announcements and some of the leadership transitions you made and how you think about the impact to both growth and profitability yeah absolutely so let me actually go back to I think it was about 10 months ago when I joined as the CFO of Bill so that that's my history with Bill when I joined one of the things that I was looking at and there was a lot of conversations already with the management team on was we have had a 20 year track record of growth and as we look at the P&R profile how do we make a step change this year on the profitability side so we were trying to balance you know as the growth was stabilizing in a mature company we were starting to think much more about now resetting what the financial profile looks like and we engaged with external consultants I did a lot of work in just sort of understanding what the lay of the land is and we came up with a lot of things that we wanted to do to streamline our operations our company overall etc so over the last 10 months or so we have you know done small restructurings and tweaks to the the expense profile but the big one which you know we've been working on for several months was announcing up to a 30% workforce reduction and that was during our earnings in the first week of May we are executing on that that's a big reduction in workforce and we're doing it really thoughtfully in the sense that we pre-announced it and now we have we don't have a situation where one suddenly one day suddenly 30% of the workforce walks out of the door we have a month and a half to two months to thoughtfully transition the roles that we do do not need anymore to the you know people who will take over parts of those roles we are driving much more focus in terms of what are the few things that we're gonna do and do them really well and fully fund them we are simplifying the org structure to take out you know a bunch of levels for the size of the company we want to make sure that we are not only act the benchmarks that we see in the industry but we are better especially in the AI world that helps us move with velocity in the next several months and the third and the key part is to actively and you know embrace the AI tools that are available in every function I own finance analytics and legal and I can tell you that day to day my life's getting simplified with the tools that I use and the amount of work my teams have to do to give me answers is rapidly simplifying so I think all of these together help us to do this with confidence reduce our workforce by 30% right after that announcement in the earnings we also announced that we are you know getting a new CRO so this is to take us into the next phase of bills growth now that we have reset the profitability profile again you know thinking of what we need to do as a public company as three legs of the stool one is profitability which we worked a lot on just to give you some numbers we first guided when I came in a 190 basis once expansion of operating margin. And we actually are delivering more than twice of that and setting ourselves for that step change that you don't even see in the numbers yet into the next year. So huge amount of work there. I would say that leg of the stool has been worked to work, the biggest benefits have been taken. The second was capital return to the shareholders. so we are we announced a material buyback of a billion dollars in the last earnings as well we are actively executing on that we think this price is really attractive especially thinking through the opportunities that we have ahead of us so executed on that and the third leg of the stool is growth and this is where our CRO comes in with a new muscle of how to take us into this next you know AI led selling profile somebody who's seen growth somebody who's you know worked closely with the SMBs and in that environment and has a lot of muscle built in on how to work through channels through your sales force etc so we are you know changing our CRO we are also our CTO is moving away as well and we are making room for a new CTO who's been with the organization for a long time he has I mean Ken has done amazing work for Bill he was the right CTO for the time and he built out amazing AI platform in a very short period of time on which we can now both agents and experiences very seamlessly without having fragmented experience so but he is taking you know he's moving on and we are promoting one of our people into that role. And Eric is amazing. He is so smart. He's been with Bill for a very long time. He understands the experience. He understands the platform we've built and is able to work in a leaner, meaner organization that works really fast. And, you know, he's got much more of a startup mindset. So I'm really excited about that. And the third change is we are putting all of our experiences across payments and software under one chief product officer, which is Mike, who joined us about a year ago as well. And Mary Kay is moving away, who used to own payments. Now, this is the right move also for us, because now we have one person who is end-to-end thinking about our experience.

So what the customer sees, irrespective of whether it's payments or whether it's software, it's one experience and everything is thought through and going to be built with this AI native mindset which you know takes out a lot of friction and makes our experiences seem less and modern understood maybe a two-part question here based on what you just said is there one any risk overlay conservatism or any you know notion of conceptual risk from this management transition and two is if we quantify some of your recent results right you had 16 top line growth operating margins of 20 and you kind of talked about some of the growth of margins historically

but you guys historically referenced a rule 40 framework so how do we think about that trade-off between either re-accelerating growth to a 20 mark or focusing on margins to get you to that you know i always have said that the best way to expand profitability is growing revenue it just falls through the bottom line which is uh which is great but periodically you have to look closely at the structure of the financial profile and make some tough decisions to reset it so that's what we've done now i think majority of the focus will shift into the next year to start to build out the things that really drive growth into the next phase of bill so i would say that we have very materially changed the profitability structure over the last 12 months and the focus will go back into growth and driving margin growth through a revenue and the the revenue linked expenses so those are things like rewards processing costs and those type of things from here on we think that the discretionary expenses are right-sized and we will continue to manage them thoughtfully but we don't expect any step changes there so that's how I think about that and if you think about the risk from all the changes I mean this is a lot of change we're executing within a very short period of time we have been planning on it and thinking about it and what is the right approach to do it for a period of time so as to eliminate the most important things most important risks what I am focused on is the the two commitments that we make to you guys which we take very very seriously is the revenue commitment and the guidance and the oi commitment in the guidance so those two we will protect with all of the tools that we have at our disposals be it you know retention packages for people or making sure the transition is smooth and the you know the package people outgoing people get is tied to what they perform over the next two months and how they transition so there are all these tools that we are using to make sure that we are eliminating the risk. I'm less worried about the management or the leadership changes. Those leaders will stay as consultants with us for one year and you know they're amazing individuals, amazing leaders and I know that if I call them or anybody else on the management team or the team overall calls them, they will be out there to help us get through the problems. So I'm less worried about that but there is a transitionary period definitely in the next couple of quarters that we have to work through to get to a different organizational structure right maybe if we take a step back and talk about the revenue growth drivers your transactions business grew 18% subscriptions about half of that at 9% what are the drivers for both segments right what are the puts and takes of the growth and and what's the long-term trajectory yeah so let me start by subscription with the subscription side of things subscription revenue is less than 20% of our total revenue now and And we have been accelerating growth over the last couple of quarters with the subscription Now, that's driven by two things. One is we have talked about our intent to go upmarket and try to get higher quality customers versus just customers who would probably be on the lowest plan and not probably interact with a lot of different products and the depth of the portfolio that we have. So we are moving upmarket. That means fewer customers who give us more revenue per customer. So you see that trend increase. You see the subscription revenue increase The other piece of the subscription revenue increases also the pricing Right-sizing we are doing so I talked about it in a couple of earnings calls earlier on when I joined that we're looking at the pricing structure We had done nothing for almost three years and this was a time to start to think about the value we're giving to our customers and what we are realizing in return we rolled out some small pricing changes which right sides the pricing of the value prop we have for the customers and you know really excited to see the results and we see sticky customers we see the customers we want to retain are staying on the platform because it's still one of the better products in the market and has all the bells and whistles and features that people need so that's on subscription side we we saw a really healthy nine percent growth last quarter which is an acceleration from the prior quarters and hope to continue to see that growth the second part is our transaction revenue again transactions are very much tied to the the customer growth and the spend environment and the spend environment of the smbs as we've said continues to be fairly stable and resilient it's not growing at a very healthy clip right now given all the uncertainty in the environment there's inflation and such but because bill has a very diverse portfolio of type of customers and where they spend and who they are that gives us kind of offsets of you know there are some things that are not doing very well like retail discretionary spending on travel and entertainment is a little bit softer on the other side we see you know some of the AI expenses being stronger and you know manufacturing in the US has been stronger as well they kind of offset each other and we continue to see overall resilience across the board so that's the backdrop of how we think about next year and as you know we haven't yet guided and given all the changes we are heads down right now in terms of planning for next year and the growth algorithm for the next three year looks like and we'll be really happy to share all of that in august when we meet right you have about a i think 35 million in float revenue a quarter yes a quarter right um how do we think about or how are you hedging against you know you talk about inflation but the risk of lower interest rates yeah if you look at our gross margin profile you'd see fair amount of stability in the rates despite the float rate reduction so there are several things right number one the TPV continues to grow so the balances we hold are also growing with that yes the interest rates are coming down which you know we've taken part of the pain already so there is less of that I think you know how low can they go so one of them is just we continue to drive growth on the platform so the balances will continue to help us I do want to mention here that float is a very critical part of our revenue stream it's a very profitable part of our portfolio and we invest a lot to earn that or we have invested in the past a lot to earn that revenue you know the trust of the customers the platform we built the security enables us to hold those funds for the customers so it's uh you know important for us as a monetization stream now how can we offset some of the impacts of rate changes is we're building out the bill cash capabilities which help us not only you know increase our TPV fly will so if you're holding cash we can approve more transactions we know the customer well our losses you know can be driven lower from that so there's a lot of ecosystem benefits we can get from driving build cash which is a relatively new product for us but also we will earn some revenue from an interest perspective as people start to hold cash in that account and we share part of that interest rate with them so there are a variety of you know things we're looking at to continue to grow that portfolio right you mentioned earlier the 1 billion authorization how do you think about you know the split between returning cash to shareholders and and M&A? Yeah and several thoughts on that right at the levels of stock that we are seeing it just very attractive to buy given the opportunity we see ahead of us. Having said that we have a very strong balance sheet and we have a really good cash position our cash flow especially with all the productivity actions and durable revenue growth profile we see you know, cash flow annually growing in a healthy clip as well. So with all of that, I would say that we, despite doing the one billion buyback, we continue to have a good amount of cash to be opportunistically doing, you know, M&A as we may need to. If something really attractive comes through, we have enough dry powder to be able to execute on that. But we want to be very thoughtful. I mean, we have a very clear focused priority right now to create a AI native experience that is absolutely frictionless and creates a very sticky and easy to adopt, you know, So focused on that. But, you know, the other thing is, and this is something that I think about always, is as we think about build and buy as a finance person, it was always a really good mathematical exercise and modeling exercise to see what does build cost and what does buy cost the cost of build with AI is starting to come down rapidly and I see a lot of excitement if you want to do something there's a lot of excitement in our product and teams to want to do it themselves because you know the time to execution is shrinking so I think that changes the equation of build and buy in my mind a little bit additionally you know you have less risk and complexity and integration of an outside portfolio so right now i don't see any um very exciting things that i

i will jump at well maybe to ask another question on the on the buy side of the equation um given your your your cohort of customers is it does it make more sense to buy a brand name something that they're familiar with or in this market where we're evolving so you know quickly with agents that it's better to buy the better kind of ai native technology it might not have an established you know customer base or whatnot but you're buying you know the best technology yeah and it this is where I think the question of how good is the technology now well we can integrate a technology and I haven't been in a few tech companies I've seen you know the rate of success with M&A integration is low and it's hard so to be able to I think acquiring talent is

very attractive so if there's something that has you know talent that can build rapidly that capability within our ecosystem that feels like something attractive that we want we would want to do once we're done with this big task of creating a certain experience but i don't i'm not i'm not seeing any big brand names that would excite me at the moment um you're making a shift from kind of smb type cohort to larger businesses is you added, I think it was about 4,000 customers last quarter.

I think that's closer to the lower end of the range, but that transition makes sense, right? Can you talk to us about that, how you're thinking about adding more quality customers versus quantity of customers?

Yeah, and one of the things that I've talked about also over the last couple of quarters is all these metrics that we look at are very important leading indicators into the growth profile, but they're also just one indicator. And in the past, we have kind of overemphasized a couple of things, but I think we need to look at the overall profile of all the metrics. Like we have anchored more on take rate, less on TPV, but it's, you know, take rate times TPV equals revenue. We have anchored a lot on NNAs, not enough on ARPU, but NNA times ARPU is revenue. So I'm constantly looking at all of those metrics that drive the revenue growth, and at different points in time, there will be different things that will be more important to us. And as we are starting to make that shift into higher quality NNAs and driving growth, in a shorter period of time, ARPU is going to be more important for us as we, you know, figure out what are the right compensation plans for the sales team, what do we want to incentivize them for, what is the right quality of customers. And as we start to stabilize that we want to start then you know using our other channels like embed where we have paychecks which probably bring in a lot more customers but they're a lower profile but we're not spending our sales force time in getting those customers product-led growth can bring in you know if it's a friction very frictionless onboarding experience product-led growth can bring in the customers at the lower end of the profile but right now we have a sales motion and i want to focus them on larger customers given that and given uh all the changes over the next quarter or two um i think that nna would be one of those metrics that will see more fluctuation as we try to focus on managing revenue and oi right we only have about six

minutes here so i want to open up any questions to any investors in the room it's always generally a very quiet room but at these conferences but maybe to talk about competitive dynamics right now right I think you have big companies like Intuit that you compete against you have smaller maybe more nimble companies like ramp how do you think about where you fit in the overall stack and given the fact that you have an embedded platform across all these different dimensions how does that differentiate you versus your peers?

So that's actually a very asked question. So the way I think about it is there are several players in the market and there are more coming only because the size of the market is so large. So in a way there is room for everybody and I think what's happening is everybody's finding their ICP or the customer profile that their product is really suited for so as I think about us we are you know really focused on our ideal customer profile where we win more deals than anybody else is anywhere from like 20 headcount to 50 headcount type of a business and that for us is you know the sweet spot we continue to move towards that 250 versus the 20 as we build out the size and scale and feature functionality for those customers if i think about intuit probably on the lower side of that icp that we have they have been trying to do bill pay for a very long time i think running a payments business fully integrated into a software is not easy you have to create a lot of different products build a regulatory framework and it kind of starts to become for into it a different type of company so how one how much they want to lean into the complexity of payments is to be seen but right now I'm not seeing a lot of you know complexity in the product that they offer and the overall seamless integration that we have so I feel we have more depth similarly with RAM a lot of talk about it again it's not a public company so we have limited understanding of their financial profile and such but they play a little bit more on the higher side of our icp and you know they are primarily spending expense whereas we really sell the platform from an integrated perspective again depth of the platform that we have is way better and richer for what these customers especially on the higher end of that icp want to do what ramp does really well by the way is their experience is very frictionless and seamless but in this age of AI that's not hard to build so that's our focus on how do we start to you know become a very seamless frictionless easy to adopt product

which is again best in class and market from a depth perspective right maybe the last question here and this was actually going to be my first question to you but I decided to save it for the end is you know as you mentioned at the beginning of a conversation you're now ten months into the role close to a year you bring a fresh lens right i think you've talked about some of the management team who was maybe a little bit more seasoned and been here for around a little more or a while but um i ultimately want to ask you you know when you came in here and you look over the last 10 months what were your learnings about things that could be improved upon and then when you look about the strategy for the next year the next few years outside of everything we already spoke about in terms of growth and profitability and all these other things like what are your key initiatives yeah so a couple of

things what I started out about ten some months ago was counting I was just joking that our team this was the last conference I said now that I've done this my whole yeah I've done the circuit I've done the year my first one was Goldman but anyway a few things it was a very intense year I have to say I did not expect that there was a lot of things that were happening I joined and had to get ready for an earnings in just a few weeks of starting finalizing the plan having all the fun with the activists and you know a bunch of market rumors getting through that and executing on three workforce reduction projects and this is all while delivering on the revenue commitments that we had made at the beginning of the year so i think it was action-packed it was intense it was hard but it's been very fulfilling and you know probably learned more than I could have ever had in any other place so thankful for that from a perspective of going forward right I mean we did a lot this year not only on a financial profile perspective but if you look at the execution we rolled out new products that are now starting to scale. We rolled out SPP, we rolled out BuildCash. The AI platform was built in a period of six months which is now enabling us to do all the AI things quite rapidly. So there was a lot of execution that happened in the year. Now looking forward, all those new products that we built out, we're going to focus on scaling those. We are going to be focused on a step change in the experience that bill has and from a finance perspective my job is to enable that growth in the most efficient and effective way so how do we allocate resources in the right places you know we said that from the workforce reduction we want to put back about 20 30 million dollars back into the business to support the growth initiatives and as AI comes out we want to make sure we have the right skill set we have the right tools for the company we are not over constraining the growth side of things and when the new product is ready we want to make sure that we are investing in the right gtm motions especially as the new chief revenue officer comes in we want to make sure that that person is able to do what he intends to do so i think that's going to be my role to really support the growth now that we have right sized the profitability looking forward and deliver drive accountability and that was something that I said in my first earnings that's really important to me as my brand and I want to make sure that I'm not only supporting the team but also making sure that we are delivering on what we say quarterly and really got it thank you so much for joining us that's great thank you thank you