BILL Holdings, Inc.

Good afternoon. My name is Tamia, and I will be your conference operator today. At this time, I would like to welcome everyone to Bill's fiscal fourth quarter and fiscal year 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. Thank you. I will now turn the call over to June Wong, Director, Investor Relations. You may begin your conference.

Thank you. Good afternoon, everyone. Welcome to Bill's fiscal fourth quarter 2025 earnings conference call. We issued our earnings press release a short time ago and filed the related form AK with the SEC. The press release can be found on our investor relations website at investor.bill.com. Joining me on the call today are Rene Lacerte, chairman, CEO, and the founder, John Reddick, president and COO, and Rohini Jain, CFO, Before we begin, please remember that during the course of this call, we may make forward-looking statements about the future business, operations, targets, products, and expectations of the bill that involve many assumptions, risks, and uncertainties. Actual results could differ materially from those expressed or implied by our forward-looking statements. In addition to our prepared remarks, please refer to the information in the company's press release issued today, our Q425 investor deck, and 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 a reconciliation of GAAP to non-GAAP and additional information regarding these matters. With that, let me turn the call over to Rene. Rene.

Thanks, June. Good afternoon, everyone, and thank you for joining us. Fiscal 2025 was a pivotal year for Bill as we executed well against our innovation agenda. We launched new software and payment products, made strategic investments to drive future growth, and drove significant profitability expansion. We have a big opportunity in front of us. The investments we made in fiscal 2025, along with our durable and diversified business model, set the foundation for us to continue to expand profitability and accelerate revenue growth in the years ahead. During the call today, we will share our recent progress and outline our plans to deliver greater value to shareholders. In Q4 and throughout fiscal 2025, Bill strengthened our platform, increased our scale, expanded our market opportunity to serve larger, more complex businesses, and strategically invested in delivering financial operations agents for small and mid-sized businesses to accelerate Bill's growth and category leadership. Three key highlights from our fiscal 2025 include, first, growing total revenue to $1.5 billion, with core revenue growth of 16% year over year. Second, we continued our track record of profitability improvements while also investing in key areas. This resulted in non-GAAP operating income exceeding the high end of our initial fiscal 2025 guidance by over 20%. Third, we built our agentic AI platform that leverages the capabilities, data, and scale acquired over the last 20 years across millions of SMBs and over a trillion dollars in spend so that we can launch intelligent finance agents quickly and safely at scale. We are excited to leverage our platform and we'll start rolling out our suite of financial operations agents to customers in Q2 of fiscal 2026. At Bill, we are not just building software and payments infrastructure, we are redefining the future for how the Fortune 5 million, the millions of small and mid-sized businesses that power the U.S. economy will manage, move, and maximize their money in order to grow and win. Bill serves more SMBs and accounting firms than anyone in our category. We are the trusted platform of choice for nearly half a million small and mid-sized businesses and over 9,000 accounting firms, including nearly 90% of the top 100 accounting firms across the US. Throughout FY25, we continue to strengthen our platform. we launched amazing new products that create new value for our customers and their suppliers, extended our advantage through our powerful two-sided network, drove new monetization, and strategically increased our market opportunity. In Q4, we launched Supplier Payments Plus, previously referred to as Advanced ACH, which streamlines millions of payment transactions from SMBs and simplifies incoming payments at scale for suppliers. Supplier Payments Plus leverages Bill's expertise of unifying software and payments to solve a critical problem for suppliers, managing thousands of disparate weekly payments from millions of SMBs. With Bill, large suppliers can now do reconciliation at scale and convert the thousands of paper checks sent by their small business customers directly into faster digital payments with rich remittance data. This speeds the collection cycle and significantly reduces manual reconciliation efforts, which is much better for suppliers and for SMBs. This product will allow us to move from a flat fee ACH transaction paid by the buyer to an ad valorem fee paid by the supplier. The value proposition resonates across industries, with companies ranging from a national law firm to a global environmental and waste management company. Businesses are using supplier payments plus to optimize their receivables for thousands of SMBs. In Q4, we delivered new products for midsize and complex businesses. Through the launch of bill procurement, we have combined AP, AR, spend and expense procurement and forecasting in a single intelligent platform, giving businesses control of their cash flow in one seamless experience. Our customers gain speed and control through automation, and the power of integrated payments all in one place. We also launched bulk payment capabilities, enhanced our multi-entity workflows, and introduced more solutions for businesses and accountants to embed Bill APIs into their existing systems so they can tailor financial workflows based on their preferences and unique needs. These APIs are part of our Embed 2.0 strategy. Overall, we continue to make strong progress on driving demand for our embedded products which John will cover later. The bill network consisting of our customers and suppliers they pay is the only one of its kind in our category, and it provides an unmatched advantage. We recently hit a new milestone surpassing 8 million members, an increase of 18% from the previous year. As more businesses and suppliers join the bill network, transactions get faster, more secure, and more efficient. As our network has grown, payment volume within the network has also increased. Today, 54% of payments on bill occur seamlessly between the payer and the receiver on our network, providing customers and suppliers with full visibility into both sides of the transaction and more options to choose payment methods that match their needs and preferences. As our network grows, our data advantage grows with it. Not only the scale of our data asset, but also the depth and richness of the intelligence and insights we have into the businesses that make up the SMB economy. It's this unique combination of scale and insights that positions Bill to win the category for intelligent financial operations. Bill is already a leader in delivering predictive and generative AI features to SMBs and accountants. Currently more than 40,000 customers benefit from two or more AI features on our platform. More than 1.3 billion documents have been processed on Bill's platform, including nearly 500 million documents through our AI features and the Bill Intelligent Virtual Assistant. The scale and richness of our data provide a significant advantage in training our models to deliver new strategic finance capabilities and intelligence that SMBs can't access on their own or through other platforms. Bill is saving businesses valuable time. Since the beginning of 2025, Bill's AI solution has increased the number of fully automated bills by 80%. We are also increasing access to capital, which is critical to success of SMBs. In fiscal 2025, our AI features helped us to proactively identify when customers qualified for larger credit limits. enabling us to extend $200 million in proactive line increases for spend and expense customers. And Bill's AI-enabled fraud solutions protect the most important asset SMBs have, their cash. In FY25, our predictive AI solutions helped us stop over 8 million fraudulent attempts. Bill's platform is proactive, predictive, and acts as the intelligence layer that powers financial operations across SMBs. We are investing in agentic AI, building a new generation of intelligent agents that will deliver autonomous finance for SMBs and accelerate the shift from doing it with you to doing it for you. To be clear, we're not just adding agentic AI into workflows. We're eliminating the workflows themselves. Our first agents will transform how SMBs complete critical business tasks, paperwork, documentation, and onboarding of vendors. We're also building new agents that provide additional security to keep money safe and flowing faster. We firmly believe our agentic AI initiatives will further improve customer retention, accelerate multi-product adoption, and fuel customer acquisition as a result of the increased value we deliver. By the end of fiscal 2026, We expect the majority of customers will be using at least one Bill agent in addition to our AI solutions, extending Bill's leadership and delivering AI and strategic financial capabilities to SMBs. At Bill, we are shaping the future across all dimensions of financial operations for SMBs and carrying strong momentum into fiscal 2026 to deliver greater value to our customers, suppliers, partners, and shareholders. Over the past year, we've added exceptional new talent to our executive team. Most recently, we welcomed Rohini Jain as Bill's CFO. She is a standout global finance leader and has a strong track record for enabling growth and scaling top technology in Fortune 500 companies. We also added Michael Cherry as EVP and GM of Software Solutions in the fourth quarter. Mike, combined with Mary Kay Bowman, EVP and GM of Payments and Financial Services, completes our team to align the strategy and execution around software and payments. In closing, we're operating at massive scale. More than 1% of US GDP flows through our platform annually. That's a staggering number, and it's a reflection of the trust our customers and suppliers place in us to move their money, automate their workflows, and give them visibility and control over their financial operations. And with Bill's network, we have built one of the most comprehensive and real-time financial maps of the SMB economy. We continue to leverage our scale and customer interactions to develop groundbreaking innovations. We're excited to simplify the lives of SMBs and accountants by harnessing the power of AI. We see a future where every business, regardless of size, has access to a strategic finance function from anywhere on any device. We believe our focus on serving the Fortune 5 million with our intelligent finance platform will enable them to move at the speed of business. I'll now turn it over to John to share more on our fiscal 2025 performance and our key initiatives for fiscal 2026.

Thanks, Rene. I've recently taken on the role of president and COO, and I'm energized to help scale our next chapter. I'll start with an update on fiscal 2025 progress against our priorities and then cover our fiscal 2026 focus areas. During fiscal 2025, we made great progress executing on our strategy to be the intelligent financial operations platform for SMBs. Throughout the year, we strategically invested to strengthen our core business and build a foundation for future growth. I'll provide a few examples of our key accomplishments during the year. Payments are an integral part of our growth strategy, and in fiscal 2025, we rolled out our local transfer experience to over 30 countries. The improved payment speed resonated with customers, and we quickly drove strong adoption. In Q4, over 10,000 customers used this solution, accounting for approximately half of our international payment FX volume. In addition, during fiscal 2025, we significantly grew the adoption of our Bill DiviCard among AP customers, with volume increasing nearly 600% compared to fiscal 2024. On the supplier experience front, we launched Supplier Payments Plus in June, and we have already received strong positive feedback from large suppliers with significant SMB transaction volume. The solution streamlines the complex cash application process, and we believe this product can create meaningful transaction revenue as it scales among the largest suppliers in our network. Turning to the accounting channel, we delivered an upgraded console that provides accountants with deeper insights into the financial health of their clients. Our product enhancements and expanded sales coverage for accountants contributed to a 24% year-over-year increase in net new customer ads from the accounting channel. In fiscal 2025, we also achieved new milestones with our embed 2.0 strategy. As the solution went live, we built out new features and we refined our partner sales motion. We recently signed a strategic embed partnership with a Fortune 500 software company that underscores our embed opportunity. We'll share more details about this partnership as we get closer to launch. We believe there's a large market for software companies interested in deploying our embedded finance solutions to support the financial operations needs of their clients. And over the long term, this could collectively translate into tens of thousands of lower mid-market businesses and hundreds of thousands of small businesses using our embedded products. The progress we made against our ambitious fiscal 2025 goals has improved the strength of our business and created strong momentum in the market for Bill. Shifting to our strategic priorities for fiscal 2026, we are starting the year with significant momentum. We are focused on the following three strategic priorities. First is to drive growth from our integrated platform, which includes our AP, AR, and spend and expense solutions. Second is to expand our addressable market. And third is to innovate with AI to drive a step function change in the value of our platform for SMBs. For each of these priorities, we are focused on executing with speed, driving tangible results, and have defined clear metrics to measure our progress. Now let's dive into each of these priorities. First, to drive growth from our integrated platform, we have prioritized the following three foundational building blocks. Front-end modernization, product-led cross-sell, and ad valorem expansion. We are accelerating efforts to modernize our UI to make it easier for SMBs to onboard efficiently and self-serve, which we believe will drive increased velocity of net new customer ads through higher conversion and retention. In addition, we are creating a more unified and intuitive experience that makes it easier for existing AP&AR customers to discover, adopt, and benefit from our spend and expense solution. With tens of thousands of existing bill customers who are great candidates for our spend and expense product, we believe these product improvements will enable significant expansion of multi-product adoption by our customers. Another building block that supports growing usage of our integrated platform is expansion of our payment portfolio. ACH and checks collectively represent over $270 billion or 85% of our annual payment volume. We now have a broader portfolio of ad valorem offerings to address this opportunity. One that we're particularly excited about is Supplier Payments Plus. We are leveraging the launch momentum and positive feedback to double down on accelerating adoption of Supplier Payments Plus in the current fiscal year, which we expect, combined with the rest of our payment portfolio, will accelerate ad valorem penetration. For our second priority of expanding our addressable market, we are focused on increasing adoption among mid-market businesses and scaling our embed 2.0 solution. The depth of our advanced workflows and payment solutions have consistently resonated with upmarket businesses. What began as an organic pull-up market is now a dedicated mid-market focus for Bill. In fiscal 2025, mid-market customer growth outpaced our overall Bill APAR customer growth by five points, and this is just the beginning. There are approximately 300,000 mid-market businesses in the U.S., representing a very large opportunity for Bill. In-market customers on our platform have two times more TPB than the average SMB and twice as many users on our platform. In fiscal 2026, we will be enabling new capabilities to help global businesses using our AP and spend and expense solutions to easily manage financial operations. We are focused on simplifying the management of international subsidiaries and enabling global teams to spend smarter through our spend and expense solution. We believe this focus on capabilities for larger customers will increase customer growth from the mid-market segment and overall TPV per customer for Bill. The second lever to support expanding our addressable market is the next phase of our embed 2.0 strategy. We believe this solution can accelerate market penetration across multiple software verticals and SMB segments. Our progress here will be evaluated based on increasing market penetration, as well as conversion of our embed partner pipeline. For a third strategic priority around AI, we couldn't be more excited about the momentum we have entering fiscal 2026. We are building innovative AI solutions to not only transform our platform, but also disrupt the entire market for SMBs. AI has been an important part of Bill's advanced features for years, and we are seeing real traction with our AI capabilities generating tangible value for customers. This year, we will be leveraging the new AI infrastructure we delivered in fiscal 2025 to rapidly introduce finance agents for key workflows in our platform. With bill finance agents, SMBs can skip step-by-step automations to directly accomplish tasks while staying informed. As we introduce new agents, we will be focused on driving adoption across our customers and partners. With these strategic initiatives in fiscal 2026, We are positioning ourselves to accelerate our market penetration and drive greater product adoption among SMBs and their suppliers to enable us to capture the growth upside as macro recovers. I'm excited to officially welcome Rohini Jain as our new CFO. Having built and led high performance teams in large multinational companies, she has seen firsthand what it takes to support growth at this stage. Her experience and perspective are critical, and I look forward to working closely together as we build the next phase of build. I'll hand it over to Rohini to cover details of our financial performance and outlook for fiscal 2026.

Thank you, John, for your kind words. I'm truly excited to be joining the team at such a defining moment in Bill's journey as we work together to shape the company's transformation from a $1.5 billion revenue business into a thriving multi-billion dollar enterprise. Our commitment to leveling the playing field for the SMBs resonates deeply with me. Equally important, Bill has always had a culture of transparency and accountability, which strongly aligns with my values. I'm committed to carrying this forward through a simple but effective communication of our results, outlook, and progress against our strategic priorities as we drive growth and shareholder value. With these in mind, let's dive into our financial highlights. There are additional details in the supplemental section of our Q425 investor deck. which can be found on the investor relations section of our website. In fiscal year 25, we achieved strong growth and margin expansion over delivering on the commitments that we had set out at the beginning of the year. Our core revenue grew 16% year over year, despite headwinds from card acceptance and a muted spend environment. With discipline management of investment dollars and portfolio efficiencies, we were able to fund and execute on our AI platform while exceeding the top end of our initial guidance for non-GAAP operating income by 23% or $45 million. For the full year, we generated $240 million in non-GAAP operating income and improved our Xfloat profitability. Non-GAAP operating margin Xfloat expanded 345 basis points year-over-year. We delivered solid Q4 results, extending our track record of doing what we say. We accelerated core revenue growth to 15% year-over-year, landing at $346 million, exceeding the high end of our guidance. We delivered $56.4 million in non-GAAP operating income, 17% more than the top end of our guidance provided one quarter ago. Moving on to some key highlights on our Q4 revenue performance. With our integrated platform, annual revenue growth for Bill APAR accelerated three points sequentially to 13%, primarily driven by transaction revenue strength. Bill APAR transaction revenue grew 15% year-over-year in Q4. Total payment volume came in strong and grew 13% year-over-year. In Q4, customers across different sizes increased their spend on the same store sales basis by 4%. APAR monetization beat our forecast primarily driven by strong adoption of our emerging ad valorem products and supported by the price increases on ACH and checks as we continue to align pricing with customer value. The strong value proposition of our platform resonates with SMBs. In Q4, we accelerated market penetration, adding 4,700 net new bill APAR customers, up from 4,200 in Q3. Our net revenue retention rate inclusive of financial institutions, came in at 94%, reflecting the lower B2B spend environment during fiscal 25 and continued supplier cost sensitivity towards payment acceptance. Annual customer retention, however, remained very healthy at 86%, underscoring the value and stickiness of our platform. Also within our integrated platform, bill spend and expense sustained strong growth while delivering an improved contribution margin Revenue totaled 151 million in Q4, up 19% year-over-year, driven by 22% card payment volume growth. On the go-to-market front, we continued to increase focus on businesses with higher capacity to spend. This led to a five basis points year-over-year increase in rewards as a percentage of card payment volume. Offsetting this, we significantly reduced credit and fraud losses by 14 basis points in Q4 compared to a year ago. Our portfolio approach is working. On the software side, we are seeing increased multi-product adoption across our customer base, which continues to be one of the key opportunities for growth. Joint customers using both bill APAR and spend and expense grew nearly 40% to 15,800 by year end 25. Our diverse payment portfolio remains a key growth driver. Spend and expense continues to scale while our emerging ad valorem products which consists of pay-by-card, invoice financing, instant transfer, and Instapay, grew 30% year-over-year. At the company level, overall ad valorem penetration, XFI, increased to 14.3% in Q4, up from 13.8% a year ago. Turning to profitability, in Q4, we outperformed on all key metrics. Our non-GAAP net income exceeded the high end of guidance, reflecting discipline in managing investments and benefits from leveraging AI in risk management. In Q4, we also reallocated resources to AI as we prepare to launch a suite of agents in the next few months. Before providing detailed guidance, I want to outline our assumptions on overall customer spend and take rate for the year. Given external uncertainty, we are being prudent and assuming flat volume per customer year over year across the portfolio. In Bill APAR, we expect similar level of take rate expansion as we did in fiscal 25. We expect spend and expense take rates to be at lower end of our previously stated range of 250 to 260 basis points for fiscal 26. As we execute to accelerate growth, we are sharpening our focus on creating efficiency and driving cost optimization. Our fiscal 26 profitability guidance reflects a disciplined approach incorporating continued expense management and further structural efficiencies. As confidence in SMB spending improves and our initiatives start to accelerate growth, we will adjust investment levels to capture additional growth opportunities. Now turning to guidance. For fiscal Q126, we expect total revenue to be in the range of $385 to $395 million. and core revenue to be in the range of 348 to 358 million, reflecting 11 to 14% year-over-year growth. Note that Q1 will be the last quarter before we fully lap the impact of a major online advertising platform's change to its payment acceptance policy. On the bottom line, for Q1, we expect to report non-GAAP operating income in the range of 53.5 to 58.5 million, We expect non-GAAP net income in the range of $56.5 to $60.5 million, and non-GAAP EPS to be between $0.49 to $0.52. Shifting to full-year guidance. For fiscal 26, we expect total revenue to be in the range of $1.59 to $1.63 billion, which reflects 9% to 11% year-over-year growth. This guidance contemplates approximately 160 basis points impact from float revenue. implying core revenue range of 1.45 to 1.49 billion, or 12 to 15%. In the latter half of the year, we anticipate growth to improve, driven by our key initiatives and lapping of the full impact from the payment acceptance headwind I mentioned earlier. Turning to the bottom line, for fiscal 26, we expect to report non-GAAP operating income in the range of 240 to 270 million. which represents a 15 to 17% range in non-GAAP operating margin. This implies an explode operating margin expansion of approximately 190 basis points at the midpoint. We expect non-GAAP net income in the range of $236 to $260 million and non-GAAP EPS to be between $2 to $2.20. For fiscal 26, we expect stock-based compensation expenses to be approximately $290 million. As the company matures, we are enhancing our focus on GAAP profitability. In that regard, together with our board, we have extensively reviewed our stock-based compensation, inclusive of executive compensation. As a first step, our fiscal 26 plan incorporates a significant reduction in grant value. with a tighter eligibility criteria and shorter vesting period for fiscal 26 compared to prior years. These changes will reduce dilution impact and continue to drive meaningful benefits in the future years as stock-based compensation expenses related to prior grants wind down. Moving on to the balance sheet, we are well capitalized, which gives us the flexibility to deploy cash through a holistic investment framework. This framework has two priorities. making accretive investments in the business to re-accelerate profitable growth, and returning value to the shareholders. We are putting investments behind the key priorities that John outlined earlier. For each of these priorities, we have clear metrics that anchor our execution. We commit to providing regular updates on these leading performance indicators so that our shareholders can have visibility into our progress and measure the effectiveness of our investments. During Q4 25 and earlier this quarter, we repurchased a total of $100 million of our stock. We see buybacks as a disciplined investment, one that at current valuations provides compelling returns. We are reinventing financial operations for millions of SMBs, and we believe the exceptional customer value will translate to significantly greater value for Bill. Reflecting this conviction, the board has approved a new shared repurchase plan. We intend to execute up to $300 million in share repurchases in this fiscal year. The impact of this repurchase is not contemplated in our guidance. In closing, we delivered another year of balanced growth and profitability while continuing to invest in the future. We expanded the breadth and depth of our platform and strengthened our distribution ecosystem. Looking ahead, our focus remains on scaling BIL into a much larger and more profitable business. I'm excited about the long-term potential of our company. We are not only operating in the category we created, but reinventing it to bring greater ease and intelligence to millions of SMBs. And now we open up the call for Q&A.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason at all you would like to remove that question, please press star followed by two. Again, to ask a question, please press star 1. The first question comes from Xinxin Huang with JP Morgan. You may proceed.

Hey, thanks so much. I want to ask first on the revenue outlook here that assumes stable core growth at the high end versus the exit rate here in fiscal 25. So I'm just curious, what are the key factors that would drive any deceleration to the midpoint? And I'd love to hear what is holding the company back from achieving the core revenue growth acceleration that you guys were excited about early in the year.

Thank you, Tianjin. I appreciate the question. So let me start first, and then Rohini can add some comments as well. First and foremost, let me just step back and just talk about there is a lot of static on this line. Sorry, I just want to make sure folks can hear OK before I give this answer. Tenjin, since you're on the call, can you hear me okay? And if you can, then I'll... Yeah, I can hear you. Let me mute on my side just in case.

Sorry about that.

Okay. Okay, thanks. Great. So anyways, I think the thing that gives us a lot of confidence and ability to be able to drive growth... This is distracting.

I'm sorry.

So the confidence and confidence and ability to drive growth really goes back to the foundational elements we've built into the company and the product and the platform. And so when we think about what we were able to do this year, we drove a lot of good growth and strength across mid-market, across account, across our supplier network capabilities, across our payment engines, and across the embedded capabilities. The agented capabilities that we're adding are something that also give us confidence. And so when we step back and look at the opportunity and belief to be able to drive growth and acceleration in business, it comes back to the foundational elements that we have, and the opportunities that we have based on the years of building the platform across the last few decades here. So I think the opportunity really comes back to a tremendous amount of driving forward across the success that we've had. Can you just turn the volume off here? Sorry, everybody, it's quite distracting. Okay, so I think that's better. I think with that, I'd like to have Rohini just discuss kind of the guide and how we're thinking about growth in the coming year and the factors affecting that.

Yeah, absolutely, and Tianzhen, thank you for the question. One of the things I want to start with is we had a strong Q4. There were some strong spend We have some strong spend trends that we saw in Q4, especially on our international payments volume, as well as the AC card adoption, which we are very excited about. But as we go into Q1 and the rest of the year, our hypothesis was that Q4 strength, a part of that was driven by some of the spend pull-in with the SMBs, as they were starting to expect some of the tariff headwinds start to hit in fiscal year Q1 for us. So with that, we are being prudent and trying to estimate slightly lower TPV levels for APARs. Similarly, as I mentioned, in the S&E take rate side, over the last year, we've seen slight deceleration of the take rates. That's really a result of the portfolio mix that S&E has. Last year, TPV remained really strong and grew at 21% on S&E, but the take rate was a little bit impacted by the portfolio mix shift. As we extrapolate that into next year, We expect some of the advertising and the T&E spend that is a higher take rate, higher interchange part of our portfolio to be under some pressure as the tariff impact on the SMEs become real. They have finite wallet sizes, and as they're trying to accommodate the tariffs in their wallets, their spend on some of these discretionary areas starts to reduce. So those are the two key factors that are impacting us. But overall, we are super excited about all these things that we can control and what we are doing. And John talked a lot about that in his script. The three key priorities, again, to remind you, you know, continuing to drive value from the integrated platform, expanding the market as we grow up market, as well as last, not the least, innovating with AI, where we expect to increase over time the subscription part of our portfolio. So hopefully that helps answer your question.

No, it does. Thanks for going through that. I'll be quick in case the line is bad on my side. Just Rohini, for you, welcome to the call, of course. I just want to maybe get your early impressions that you've been here for a little bit at Bill. What have you learned about the company? Any surprises? And I'd love to hear if you might do anything differently on the investor relations front, including your personal guidance.

Thanks. Yes, absolutely. Love that question. And I've been, for the last six or seven weeks of being here, have been thinking deeply about this. One of the things that I feel most excited about is the product itself. The products we have are very sticky, really strong, customers love it, and make for a really strong business model and a resilient business model, which I'm very excited about. Secondly, the team that Rene has put together has deep subject matter expertise. They're experts in their field, but they're also really building a strong culture of execution and driving outcomes. So I really look forward to working with that very accomplished team to drive results in the future. On the things that I'm focused on in the coming months and weeks is really working very closely with you guys to start to strengthen our communication with the investor community overall, trying to figure out better ways of strengthening our understanding of the business together and communicating the results in the most effective way. So that's going to be something that I look forward to doing with you all.

Thank you. The next question comes from Trevor Dodds with Bank of America. You may proceed.

Yeah, it's just one for me. Can you guys dive deeper into the agent's opportunity across payables and payments? and then just elaborate on what some use cases might be.

Thank you, Trevor. I really appreciate the question. It's something we are very excited about. Maybe before getting into some specific agent cases, let me just step back and kind of frame how I think about the market, the platform we've built, and how AI is going to impact SMBs. First and foremost, the example I think about is before Bill, it was a do-it-yourself model. Every business had to manage their financial operations on their own. They had to have filing cabinets, sticky notes, checks. They had to reconcile checks. They had to integrate with their ERPs and their accounting packages. This was a ton of work, and a lot of time spent doing that meant that businesses weren't able to actually drive the strategy forward of the business. We came along then and developed the do-it-for-you, do-it-with-you approach, which is super valuable to the business because we helped them along the way. Where I see AI going is taking the do-it-with-you approach and putting it into a do-it-for-you model. What I mean by do it for you is that many of the tasks that are inside of the financial operations category, they are mundane, rote tasks that can be automated with great AI capabilities. And so if you think about what we've already done from an AI perspective, we've already leveraged AI from a data ingestion process. We have a product called IVA, the Inbox Virtual Assistant, that has so far ingested over 500 million documents. In the last year, the time saved and the number of bills that actually have increased to over 80% of where it was a year ago of the no-touch-based document being entered to the platform. In addition, we've used AI to increase the lending capabilities across the platform. When you think about the credit and extending the ability for our customers to be able to have more card access for their products across the business. We've also used it to obviously stop fraud, which I talked about. And that's just the beginning. You know, we've developed this a massive amount of scale, 1% of GDP. In some ways, it's staggering. But that's all predicated on the fact that we've got a tremendous amount of data and a tremendous amount of trust. And those are the key elements that actually will drive AI forward. Without that, AI is not going to be successful. Businesses won't be able to use it to the advantage that we all expect. And so for us, The reason to do it for you is a game changer is because we're going to be able to take that trust and that data, and we're going to be able to wrap that into experiences where the customer no longer has to do the effort that it used to take to run their business. Our mission at Bill has always been and always will be to make it simple to connect and do business. The operative words there are connect and do. We have a network that has over 8 million entities in it now, and we do over 1% of GDP. And so when you take those two together, The agents that we're going to be able to complete and really add value to our customers for are going to be around intake. So when we think about intake, this is collecting documents. This is entering documents. This is routing documents for our customers so that the approval process happens. It's going to be about supplier management. Last winter, we talked about 1099 capabilities and the acquisition we did there. We have an opportunity to really complete the network with supplier management done by agents so that buyers and suppliers are automatically connected. That's going to lead to tremendous opportunities from a payment execution perspective, giving businesses choice to be able to execute on the payments that they want. That's super, super, super powerful. And then I think the last area of agents that we're super excited about is all of that leads to an opportunity for self-serve inside the product and ultimately an ability to drive insights that businesses haven't had before. Small businesses, and I grew up with them and among them, they don't have the MBA. I like to call my MBA the dinner table MBA. That's what small businesses have. But we're going to be able to leverage that data and that trust that we have to create insights on a platform based on the trillions of dollars to spend that go through a bill, the billions of dollars of monthly transactions, and the millions of transactions every month. We're going to be able to leverage that in a way that nobody else is able to do. We are uniquely positioned for this AI revolution, and we are super excited about what we're going to be able to do for our SMB customers.

Thank you. Really appreciate it. Thank you, Trevor.

Thank you. The next question comes from Chris Quintero with Morgan Stanley. You may proceed.

Hey, Renee. Hey, John. Hey, Rohini. Congrats on joining the team here. I want to ask on the mid-market side of the business, really encouraging to see that be the faster growing part of the overall bill platform. But I'm curious, as you kind of have a more dedicated motion there and start to grow, how do you think about evolving the go-to-market motion there? And could you start to look at making more partnerships with system integrators and other ISVs? How do you think about that evolving over the next couple of years?

Yeah, thanks for the question. So we've had a lot of success with the mid market focus, particularly in fiscal twenty five, where that segment of customers grew faster than the overall customer base. And we see the importance of this segment, because they're just much larger businesses twice the than the average small business, two times the number of users. And so they contribute much faster to the overall growth of bill, including on a TPB per customer basis. So we have a super efficient go to market motion. As you know, we leverage multiple channels direct to small businesses. We partner with accounting firms and more recently with our embed strategy, both banks and software companies. So we expect to continue to leverage those motions while increasing the allocation of resources that we have. They're focused on the mid market segment, the The solutions that we have, the depth of capabilities around workflows and advanced features have resonated with mid-market customers for a long time, and we're continuing to see that. So we're also investing behind the capabilities to serve mid-market customers, in particular international product capabilities with our spend and expense solution. And so we think we're going to continue to double down on the go-to-market motion that we have now and drive continued success.

Excellent. Thanks, John.

You bet.

Thank you. The next question comes from Darren Peller with Wolf Research. You may proceed.

Guys, thanks. And really, congrats again. I just want to start off with a real look at guidance again, because again, you ended the year with core revenue growth at 15%, and you called out that you're going to be lapping or anniversaring the headwind you had from the the media customer that that obviously stopped taking virtual card earlier later earlier in the year and so you know you have one quarter to grow grow over that and so it would imagine that you'd have a opportunity to do better unless trends change and you obviously are showing good execution on the transaction take rate so just help us understand a little more on the thought process on your outlook for the year just how much is conservatism given the underlying macro dynamics And then maybe either John or Amy, if you could just rank order the drivers of sequential take rate expansion from here, where do we expect to end the year from an APA or take rate standpoint?

So let me start and then John, you can add anything that I missed. So let's talk about take rate for a second. I did have some information on my prepared remarks, but I will unpack a little bit more for you. So on the ATAR side, we actually saw 0.4 basis points of take rate expansion in fiscal year 25. Going into fiscal year 26, we would expect a similar level of take rate expansion. We have some definitely macro headwinds that we are trying to contemplate within the guide. And if in the back half of the year, things start to ease up and the spend compression turns around, We will definitely be towards the higher end of our guidance, and that's why the range. So coming back to S&E, over the last whole year we see sequential drop in the take rate, and as I said earlier to Tingen's question that, you know, a lot of that is to do with how the discretionary part of our S&E portfolio spend is performing. As we started seeing the early results in Q1, We saw some of the Q4 trends normalized earlier on in the year, and which is not unexpected. We were actually thinking that's probably going to happen. And that's really because, you know, SMBs have a finite wallet, and they are trying to absorb some of the costs of the tariffs, which is leaving them less money to spend on advertising and T&E and such categories, which is suppressing the take rate within the S&E portfolio. So again, as I said, we're being prudent. I wouldn't say conservative, but as the initiatives that we have in the pipeline start to deliver results as well as the macro environment turn, we expect to continue to be on the growth trajectory.

I'd add to that, Darren, that we're really focused on driving penetration of ad valorem payments overall. We now have a pretty broad portfolio of solutions that address The needs of both large and small suppliers, we saw significant growth in our emerging portfolio and fiscal 2537% growth that's across pay by card and some transfer and instant pay. And so we're focused on continuing to scale that with the addition of supplier payments. Plus, while also expanding our existing portfolio, the more established products around virtual card and international payments, where we actually had a lot of success in fiscal 25, both stabilizing volume and. and growing volume on virtual card while managing through some of the volatility associated with international payments in the current environment that we're operating in. So, these things combined with our efforts around cross-sell of S&E to the bill base collectively give us confidence in the ability to expand the Ad Valorem portfolio, which ultimately that's going to be the biggest driver of expanding, take greater monetization over time.

Okay. Very helpful. And then just Renee or John, customer ads continue to trend pretty well. And I'm curious where your thoughts are around where we should expect to model that out for the remainder of the year in terms of your sequential customer ads on both sides of the business or collectively even. And what are the number one or two drivers of that that's incremental to the business that's really helping you add more customers now again?

Thanks, Darren, for the question. There's a lot of Activity across the business, because of the breadth and depth of the platform that we have and how we go to market. So, you know, as a reminder, we go direct, we go through accounts and go through partnerships on the direct and account side. We've obviously talked about the focus of getting the right customer on the right time. And so, for accounts, we had a very strong quarter with the net ads year over year going up significantly. And we believe that our focus in the next year will not really change in that, you know, accounts are, we have what 9,000 accounting firms across the country. We are the ones that have helped them actually create a whole new business line of business for themselves, which is the cast practice. Roughly by our estimates, 9,000 is around 10% of the overall accounting market. And so for our ability to community drive their success, that will be a critical factor for what we do. I think at the highest level, when we think year over year, we're thinking roughly the same targets that we've done this year. But I just want to call out this opportunity on the third wheel of our ecosystem, which is embed. And this wasn't your question, but I just want to make sure folks understand how impactful and how excited we are about the opportunity that we have. We've worked years to be able to have this opportunity where our platform can be extended into the right place at the right time for SMBs. Part of our philosophy all along is that you have to meet SMBs where they are, and we have an ecosystem that does that. And so our ability to kind of drive success in FY26 on Embed is predicated on success we had in FY25. Our Embed 2.0 platform is being well-received. We mentioned a new deal with a Fortune 500 company that we're super excited about. This company serves lower mid-market to mid-market customers, has trillions of dollars of spend that their customers do on their platform, and the opportunity for us to kind of tap into that, support the customer activity that's happening already on their platform with our embedded solution is only because we did all the investment we did in 25 to enable Embed to be well-positioned for this market. I'm super excited about that opportunity because of what we've already done been able to, you know, accomplish on that opportunity. But I'm also excited about what we just recently signed up that, you know, in the last couple of days here, another partnership that reaches hundreds of thousands of SMBs, again, you know, leveraging the embed $2 platform. And so when we think about adding customers going forward, you know, we're going to consistently think about getting the right customers at the right time and from the right source. And part of that is going to be embed. And I wanted to highlight these capabilities on embed and these successes on embed. And we will share more as they become launched and available by our partners. But we are super excited about what we're seeing, the demand and the pipeline, and the opportunity because of the platform we've built over the last few years.

Okay. That's very helpful. Thanks, guys.

Thank you, Darren.

Thank you. The next comes from Scott Berg with Needham and Company. You may proceed.

Hi, everyone. Thanks for taking my questions. And, Renee, if you didn't know, my superpower is translating through static, so we'll be just fine here. Sorry. I just wanted to take a look back at the fourth quarter here. We go back to three months ago when you guided the quarter. I think there was some extra conservatism around payment volumes and take rates. And payment volumes in particular for both categories, APAR and spend and expense, the growth rates kind of accelerated quarter over quarter. I guess what was better in the quarter than maybe what your slightly more conservative assumptions had 90 days ago?

So yeah, absolutely, happy to take the question. What we saw in Q4 was primarily a couple of areas of strength. First of all, as I said earlier, our FX IP product performed really well, which you have heard from other people talk about it as well. We also saw AP card do really well. And that's actually really encouraging for us as we start to diversify our ad valorem portfolio. this is really some of the good green shoes that we're counting on and diversifying the growth of the portfolio. So those two were the specific areas. And overall, the spend environment in Q4 got better. And as I said, some of that was pulling off Q1 demand and spend that SMBs were trying to do. And we are seeing the proof of that hypothesis come through now early in the quarter. So those, I would say, were the few things that helped us in Q4.

helpful and understood. I guess as a follow-up, I know Renee spoke a lot about agents and was in John's script as well. How do you think about monetizing those? The feature functionality seems very much up the proverbial alley of what you all do and what the platform's functions really surround, but how do you think about monetizing that?

That's a great question, Scott. One of the things that we've always done is to make sure that we're adding value for our customers and continue to drive their efficiency and their effectiveness running their business. And so when we think about what we're going to be able to do with agents, we think it's going to be significant value that we're adding. And so it is going to be part of the evolution of the business will be how we leverage and monetize those experiences for our customers. And I think, Rohini, you might have a few thoughts on that as well.

Yeah, absolutely, Rene. I'm as excited as you are with all the AI agents going out into the market. And, you know, especially its potential to accelerate our subscription revenue growth rates as well to create a more balance between subscription and transaction revenue portfolios. So as you think about AI monetization, I think of it in three phases. The first phase is really get a lot of these agents out, driving value to the SMBs, and have them adopt and use it so that we can make them the best product there is available. The second phase will be how we start to bring out the differentiated subscription pricing for some of these AI use cases that we have. And over the longer term, we want to have sophisticated agents that are helping customers transaction by transaction and build the capabilities to be able to monetize that on a transaction basis as well. So that would be our evolution of how we think about AI monetization. I do want to reiterate our philosophy of first we drive value to the customers and have the pricing follow it when the customers start to see the value.

Very helpful.

Thanks for taking my questions.

Thank you, Scott.

Thank you. The following comes from Kenneth Suchovsky with Autonomous. You may proceed.

Hey, good afternoon. Thanks for taking the questions. I was wondering if you could help us square the same-store sales growth of 4% in bill APAR with the TPV per customer at roughly flat year-over-year. Is that four-point gap consistent with what you've seen historically, meaning is that simply a function of newer customers coming onto the platform, or is it driven by I guess onboarding smaller customers or churn or anything else.

Yeah, thanks for the question, Ken. I'd say it's primarily still a mix related item where we have smaller customers that make up an important part of the customer base, primarily by working with our accounting firm partners is where we reach most of those customers. But there's also some level, as Rohini mentioned earlier, you know, we're trying to be, prudent with the environment that our SMB customers are operating in and make sure that our expectations are reflective of recent trends that we've seen in spend patterns and make sure that we're not getting ahead of our skis on expectations, just given the number of uncertainties that exist for small businesses.

Yeah. Okay, great. And maybe just one on subscription ARPU and bill APAR. I mean, that Looks like that metric was down a little bit, again, quarter over quarter. So I was wondering if you could talk about the drivers of that. I was thinking that, you know, as you push up a market and you get these middle market customers, that would presumably help that figure. So any thoughts there and just any thoughts on how that metric will trend throughout the year? Thank you.

Yeah, you bet. Great question. And you're right, we saw a slight decline in the subscription ARPU. And the main driver there is a slightly lower number of users per customer. And I think that's directly in response to the environment that small businesses are operating in. They're scaling back slightly. Rohini mentioned earlier, you know, that they're typically managing within fixed cost budgets and things like that. And again, the smaller customers are maybe a little bit more sensitive. So that's something that we're working through. There's also some multi-entity larger businesses that we work with through the accountant channel that could have some implication there, just the way the math works. But over time, I think you're right to suggest that we should see subscription ARPU expand by virtue of being more successful with the mid-market customers who are going to just be much larger on average, bring us more users and and more volume. And it'll take a little while for the overall mix of our customer base to evolve such that we see that dynamic come through the ARPU number. But that is something that we're expecting. Great.

Thank you, John. Excited we are about the AI agents as well. And over the long term, that would be a key lever for us to drive increased ARPU as well.

Thank you, Ken.

I would now like to pass the call back to the CEO, Rene Lacerte, for closing remarks.

Well, thank you, everyone, for joining us today. We closed FY25 with strong growth and profitability results while driving some strong momentum for SMBs. And FY26 will leverage our momentum and investments in AI to continue to transform the market. All of us at Bill are energized by the opportunity ahead and look forward to sharing our progress with you. Take care and have a great evening.

This concludes today's conference call. Thank you for your participation. You may now disconnect your line.