BILL Holdings, Inc.

Good afternoon, and welcome to Bill's second quarter fiscal 2025 earnings conference call. Joining us for today's call are Bill's CEO and founder, Renee LeCert, President and CFO, John Reddick, and Vice President 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 2025 earnings conference call. We issued our earnings press release a short time ago and furnished the related form 8K 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 Rene LaCerte, 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, targets, and results of BIL 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. Now I'll turn the call over to Renee. Rene?

Thank you, Karen. Good afternoon, everyone. In Q2, we delivered strong financial results, launched innovative product updates, and continued our track record of execution across the company. We are leveraging our leadership position to empower small and mid-sized businesses, and we are extending our lead by expanding the depth and breadth of our platform and diverse distribution ecosystem that includes accountants, partners, and network members. Through focus and dedication, we are delivering robust financial performance and positioning Bill for long-term durable growth. Our second quarter performance reflects our continued commitment to balance growth and profitability while generating strong cash flow. Our leading AI-enabled platform, efficient go-to-market, and disciplined operation drove 16% year-over-year core revenue growth while driving great margin expansion. Non-GAAP operating margin was 17% and expanded three percentage points year over year. Our focus on efficiency drove strong cash generation with a free cash flow margin of 20% in Q2. During the quarter, our platform was used by more than 480,000 businesses to automate their financial operations. Customers transacted nearly $85 billion in payment volume across 30 million transactions using the bill platform. Our mission is clear. We make it simple to connect and do business. We are winning in the SMB market. We are addressing a vast market opportunity to automate financial operations for millions of small and mid-sized businesses, and we are moving quickly to capture this opportunity. 99.9% of businesses in the US are small or mid-sized, with fewer than 500 employees. These businesses drive our economy, employ nearly half of US workers and contribute trillions of dollars to the US GDP. Yet they are often underserved by technology because the market is highly fragmented and SMBs are difficult to reach. This is why the majority of SMBs still use manual legacy processes and why Bill is so well positioned to automate their financial operations for the first time. A great example of how our innovation powers growth across the SMB landscape is Ignite Medical Resorts. a company that pairs advanced medical rehabilitation with luxury hospitality. Ignite Medical Resorts has been a customer of Bill since 2020, and during that time, it has grown from operating two facilities to more than 23 across the U.S. Shona Hanscom, Executive Director for Ignite Medical Resorts, said, and I quote, Bill has been a life changer by supporting our rapid growth. We manage nearly two dozen rehabilitation resource and process about 2000 payments a month. Before Bill, many AP tasks, including coding and approving bills were handled manually. You can imagine how time consuming it was running our back office that way. Bill completely changed the game for us. It replaces the manual process with digitized and automated workflows and provides robust document management and collaboration tools making it a breeze to pay thousands of bills each month. The financial back office makeover did not just stop there. Bill also completely transformed our spend and expense management experience, and we are now running 95% of our expenses through its platform." Bill is the essential financial operations platform for Ignite Medical Resource and for SMBs everywhere. We transform and empower SMBs of all sizes across all types of industries. Our solutions eliminate complexity and guesswork that have long burdened SMBs in their financial operations management and frees them with automation so they can focus on growing their business. We've taken a different approach from other software and fintech companies in order to serve the broad and diverse SMB market at scale. We architected our platform to support an end-to-end view of the transactions and the required workflows while building an ecosystem that lets us support SMBs wherever they are. AI has been deeply embedded since the beginning to eliminate data entry, accelerate payments, and easily match customers with suppliers within our network. Our extensive platform features and automation tools combined with our large proprietary data assets that include hundreds of millions of transactions and documents provide the foundation to expand our surface area. adding more solutions to the automated financial back office. Through our continuous innovation, we broaden our ability to serve an increasing range of an SMB's financial operations needs. We have shared in recent quarters that as we see clear demand signals for our solutions from mid-market customers, we are building functionalities to more fully address the needs of this segment of the market and the accountants who serve them. Some recent examples include our investments to create a game-changing procure-to-pay experience and powerful multi-entity tools that enable larger businesses to drive more automation and efficiency gains across all of their entities. Customer and account reception to these newer capabilities is very positive. The scale of the network and richness of our platform enables Bill to solve many of the most complex problems that businesses face on a daily basis. We are increasingly engaging with both sides of our two-sided network so that businesses can more seamlessly work together. For example, once a year, businesses have to file 1099s for payments made to certain suppliers. It is a hassle and requires collecting tax information from suppliers one by one. After a short development cycle, we recently introduced embedded 1099 functionality to transform this into a seamless autonomous process for both our AP customers and their suppliers. Since January, over 5% of our customers have made nearly 200,000 1099 filings through our platform, demonstrating our two-sided network in action. In short order, we eliminated another headache of running a small business. With a few clicks, our AP customers can now file and send all of their 1099s to all of their suppliers. This functionality is really important as it not only automates work for our AP customers, It also enables a dramatically better solution for suppliers paid via bill. They can now create one W-9 across all of their customers, and then they can automatically receive electronic 1099s every January. This is an example of what it means to make it simple to connect and do business. Turning to payments, we have significantly expanded our product portfolio, particularly card offerings. The execution of our card strategy has led to card adoption among AP and AR customers more than tripling over the past two years. As part of this, we continue to make progress on enabling customers to use their Bill Divi card as an alternative to ACH and check payments when making a traditional AP payment. This product now leverages our AP customers' relationship with their vendors to drive acceptance of card payments. We expect card adoption to expand as we create more differentiated card experiences. We are continuing our expansion into working capital to solve many of the cash flow needs of SMBs. Cash flow is typically the number one challenge faced by SMBs. In fact, the 2024 Goldman Sachs 10,000 Small Businesses Voices Survey found that 77% of small businesses were concerned about their ability to access capital. We are leveraging our large-scale and unique proprietary data and network to build differentiated AI-powered underwriting capabilities that provide businesses with access to liquidity at the time that they need it. Since our initial launch, more than 30,000 vendors have used our invoice financing product to access over $800 million in invoice advances. Turning to our ecosystem, we partner with top banks in the US and thousands of accounting firms, provide embedded solutions to various software companies, and have a large proprietary member network. For accounting firms, our solutions not only enable partners to transform the financial operations of their clients, but also their own. Take Jitasa, for example, the nation's largest accounting and bookkeeping firm focused exclusively on serving nonprofits. Our accounts payable and spending expense solutions have become an indispensable part of its tech stack for approximately 80% of their clients. Together with Bill, Tatasa modernized the B2B payment processes for their nonprofit clients, helping them to ensure cash flow health and drive better business decisions. With the majority of its clients on Bill, Tatasa was able to streamline employee training and create more efficient operations, which led to a 20% gross margin improvement for their business. Accountants have been an important strategic part of our ecosystem from the very beginning, and we are doubling down on accountants to expand our leadership position. We are leveraging our customer feedback loop to do more for existing accounting partners and to help them more strategically and efficiently serve their clients. We are also investing in our go-to-market motion to drive more penetration across the omnipresent accounting firm market. There are more than 40,000 CPA firms in the U.S. and more than 100,000 when you include bookkeeping firms. Accountants and larger businesses are asking for our embed solutions, which opens up new avenues for SMBs to access our platform. Our learnings from working with the largest banks in the US serves as a great springboard for us to extend our product reach. In less than a year, we rolled out our embed 2.0 platform with tools for partners and customers. We are making our leading workflow and payment functionalities available to larger businesses and accounting firms so they can streamline their operations. We are rapidly expanding our capabilities here and during the quarter, we added the ability for customers to seamlessly integrate bill spending expense with their existing systems. The reception has been strong with good early adoption by customers. With our vast distribution ecosystem, we have created an unparalleled network that captures the interactions between buyers and suppliers and generates a large amount of relational and transactional data. Over the past four years, we have more than doubled the size of our network to over 7 million network members. Serving suppliers is an important part of our expansion strategy. We are continually investing to enhance our platform experiences to simplify their automation while building direct relationships with the largest suppliers. These are important initiatives that drive ad valorem and payment adoption across the network. Large suppliers on average receive 5,000 check and ACH transactions per quarter through our platform, which presents a significant opportunity to help these businesses eliminate a large volume of manual work and streamline payment acceptance at scale. We're investing in enhanced automation, such as straight-through processing and advanced ACH. With these capabilities, we're adding specialized go-to-market teams focused on addressing the specific needs and complexities of these large suppliers. We believe this dedicated focus will translate into efficient and streamlined experiences that drive revenue. As we look ahead, we remain laser focused on penetrating and serving the large market opportunity with differentiated solutions that bring SMBs more aha moments. We are excited about the future to further empower SMBs and the progress we are making. Our vision and success attracts strong talent to the company. We recently added two new directors to our board Kerry Gohmann and Dan Wernickoff. They have deep expertise that will help us advance our strategy. Kerry has an extensive track record of scaling SaaS and FinTech businesses that are SMB-focused. Dan has extensive experience leading business and consumer brands, including as EVP and general manager at Intuit for both the small business and consumer groups. I look forward to working with them as we build on our momentum to widen our leadership position in the market. In closing, we are making great progress enhancing our platform and payment experiences while delivering profitable growth. Hundreds of thousands of businesses trust Bill to run their financial operations, and there are millions more to serve. Our robust product and broad ecosystem position is second to none. We are capitalizing on this compelling market opportunity to be the de facto intelligent financial operations platform for SMBs. Now, I'll turn the call over to John.