BILL Holdings, Inc.

call. Joining us for today's call is Bill's CEO, Renee Lazar, President and CFO, John Ruttig, and VP of Investor Relations, Karen Sansot. With that, I would like to turn the call over to Karen Sansot for introductory remarks. Karen?

Thank you, Operator. Welcome to Bill's fiscal second quarter 2024 earnings conference call. We issued our earnings press release a short time ago and furnished the related form 8 to the SEC. The press release can be found on the investor relations section of our website at investor.bill.com. With me on the call today are Renee Lissert, chairman, CEO, and founder of Bill, and John Reddick, president and CFO. Before we begin, please remember that during the course of this call, we may make forward-looking statements about the future operations and results of Bill that involve many assumptions, risks, and uncertainties. If any of these risks or uncertainties develop, or if any of the assumptions prove incorrect, actual results could differ materially from those expressed or implied by our forward-looking statements. For additional discussion, please refer to the text in the company's press release issued today and to our periodic reports filed with the SEC, including our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. We disclaim any obligation to update any forward-looking statements. On today's call, we will refer to both GAAP and non-GAAP financial measures. Please refer to today's press release for the reconciliation of GAAP to non-GAAP financial performance and additional disclosures regarding these measures. Note that at times during this call, we will discuss bill standalone results, which exclude our bill spend and expense management, which was formerly called DIBI, invoice to go accounts receivable, and SINMARC financial planning solutions. Now I'll turn the call over to Renee. Renee?

Thank you, Karen. Good afternoon, everyone. Thank you for joining us today. We delivered strong profitable growth in the second quarter as we continue to advance on our strategy to be the essential financial operations platform for SMBs. In Q2, we grew revenue 22% year over year, generated non-GAAP net income growth of 48% year over year, and produced a 23% non-GAAP net income margin. We achieved this strong combination of growth and profitability in a challenging macro environment as SMBs continue to carefully manage their spend. Our performance demonstrates the strength of our business model, the value of our platform to our customers, and our commitment to deliver profitable growth. These results reinforce our conviction that when the macro environment improves and SMBs start spending for expansion, Bill is well positioned to drive strong growth across our business. The Build platform serves as the center of financial operations for our customers. At the end of Q2, more than 470,000 businesses used our solutions. During the quarter, these businesses completed more than $75 billion in payment volume on our platform. Our scale and experience uniquely positions us to continue to redefine how SMBs everywhere automate their financial operations. We are the innovation leader and we are continually expanding the breadth and depth of our solutions. As we do this, my confidence grows about our ability to help SMBs everywhere transform their payments and financial operations. Today, there are millions of SMBs transacting trillions of dollars of payments using manual legacy processes and paper checks. This is terribly inefficient and it will change. Our platform was purpose-built to help SMBs modernize and streamline their financial operations. we hear increasingly about the gains in efficiency, visibility, and financial controls that we provide. In short, we eliminate the friction of doing business. An example of a business transforming their operations with our platform is Enlightened Equipment, an ultralight hiking gear company based in Minnesota. Jessica Sonek, their director of finance, said, and I quote, Bill has been a huge time saver, establishing strong internal controls and generating operational efficiency. Every single payment that runs through any of our bank accounts goes through Bill, from the electric bill and rent to raw material purchases from abroad. The increased control with spend and expense capability has been a game changer in terms of budgeting for different departments and managing spend for each vendor. Bill really empowered me to transform the manual and time-consuming financial operations process into something that was simply beautiful and efficient." SMBs are difficult to reach at scale. The diverse and broad ecosystem we developed that enables us to reach them efficiently is a core competitive advantage. We know how to partner and to bring this transformative experience to SMBs at the touch points where they prefer to do business. Our go-to-market ecosystem includes direct sales and our large network, as well as accounting firms and financial institutions who are among an SMB's closest advisors. Bill is trusted by more than 7,000 accounting firms who recommend and use our platform across tens of thousands of clients. We have a successful track record of partnering with accountants, which includes having developed a platform that enables them to provide more strategic and operational value added services to their clients. There are firms now that base their entire practice on client advisory services. Before Bill, this was nearly impossible. Our platform empowers accountants with a suite of features to enable collaboration between their staff and clients across multiple workflows. With Bill, accountants help their clients simplify their operations and have more time to focus on growing their business. It's a win-win for all. A good example is Highline, an SMB-focused and tech-savvy accounting firm. Matt Gardner, founder and CEO, said, and I quote, Combining AP, AR, and Spend and Expense Management into a central hub has been a great change for us. At Highline, we give our customers a competitive edge by getting them onto best of breed cloud tools like Bill. This gives them full operational transparency and 24-7 online access, which modern business owners expect. Bill allows us to streamline our workflows to increase speed and work quality and focus more time on providing strategic advice to our clients. We also partner with some of the largest financial institutions in the US. Similar to accounting firms, financial institutions leverage a white label embedded version of our platform to help their business banking customers modernize their financial operations. The FI channel positions us to tap large numbers of SMBs as they transform their financial operations via their online banking experience. Traditionally, most FI partners have offered just ACH and checks to their customers through our platform. Given our payments expertise, large network, and extensive experience in driving payment adoption, we are making early progress in bringing our ad valorem offerings to our FI partners. Six financial institution partners have started leveraging more of our payment modalities, such as virtual card, instant transfer, and pay by card. Regarding Bank of America, a couple of quarters ago, I discussed that given our success in serving B of A's new small business customers, we were now working together to extend our solution to serve their installed base of SMB customers. Since then, we have been working with them to define and build the experience needed to reach their existing customers. Separate from this effort, the bank recently shared with us that they have been evolving their firm-wide payment strategy, and that evolution will impact the solutions they offer to their existing customers. We will continue to work side by side with the bank to determine how to best leverage what we have currently deployed to support their broader payment strategy. We are in the early days of understanding the impact on our expansion opportunity with the bank. Our experience serving nearly 500,000 businesses, more than 7,000 accounting firms, and leading financial institutions in the U.S. gives us strong foundational competencies for extending our reach through more embedded offerings. The core competencies underneath this level of trust are our flexible ways to integrate with software systems, our payment risk management and regulatory expertise, our large data asset and network, and our ability to serve businesses and transact payments at scale. We move 1% of GDP and are licensed to move money in all 50 states and Canada. This set of foundational capabilities and expertise places us at the center of the convergence of software and payments, and positions us well to extend our capabilities to other software companies. As the market unfolds, we see opportunities to expand our ecosystem to include embedded offerings beyond the account and FI channels. The convergence of software and payments is increasing the needs for more embedded financial operations. We have built our platform and ecosystem to support partners across the SMB landscape. We believe our agile platform model incorporates various capabilities into our partner solutions and can accelerate the convergence. In addition to our financial institution and accounting embedded solutions, we also have enabled API capabilities with embedded solutions for a number of different use cases. Hundreds of developers have created integrations using our APIs to support thousands of customers. For example, an accounting firm leveraged our API to automatically create email and collect invoices for over 1,000 firm clients using the data from their practice management software. The potential use cases are vast, and we are just beginning to increase focus in this area. We are excited about the scale of the market opportunity we are going after and our position for the next chapter in Bill's growth. In preparing for the road ahead, we are doubling down on our core strengths, evolving our strategy, expanding our offerings, and scaling operationally. As part of our focus, we have made some hard choices. In December, we made the very difficult decision to right-size our organization by reducing our workforce by 15% and closing our Sydney office. We made this decision in order to streamline our operations and further balance growth and profitability while we concentrate resources on our most important priorities. As we build the foundation for our next phase of growth, I asked John to take on broader operational responsibilities in his new role as president and CFO. The senior team under John's leadership recently completed a thorough assessment of our business operations and growth priorities, and I would now pass the call to John to provide an update on this important effort.