BILL HOLDINGS, INC. (BILL): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/BILL

Headline

Field	Value
Ticker	BILL
Company	BILL HOLDINGS, INC.
Sector / Industry	Technology
Current price	$47.36/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	revenue-multiple
EV / sales paid	3.5x
Steady-state operating margin assumed	32.6%
Implied growth	5.9%

The company earns no operating profit yet; the inversion runs on the revenue multiple and an assumed steady-state margin.

Solve inputs: computed at a 10.9% cost of capital with 4% terminal growth over a 5-year stage, holding a 32.6% terminal operating margin (81.4% gross margin x the 40% mature-conversion prior); each 1pp of cost of capital moves the implied revenue growth ~5.2pp.

Reconcile: at the x-ray's 9.3% required return this reads ~-2.4%/yr; the models below use their own rates.

How unusual the bet is: within-range (limited comparison data)

Reference	Value
vs own history	-1.70σ
implied end-window share	0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	6.08x	1	expensive
Earnings	4.70x	2	expensive
Relative	7.69x	1	expensive
Growth	—	0	—

Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.0%); the inversion above states its own rate.

Per-Model Detail (n=4)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$108.26	0.44x	no	FCF base $0.4B, growth 12% (input: historical growth), terminal g 4.0%, WACC 8.0%, 6yr projection
DCF Exit Multiple	Growth	$0.00	—	no	Negative/zero FCF or EBITDA — equity value floored at $0
Relative Valuation	Relative	$6.16	7.69x	yes	P/E 77x (blended: static sector reference 35x + trailing (TTM) 32539x), scenarios: 63.9x / 77.0x / 90.1x (bear / base = reference held flat / bull), EV/EBITDA 25x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$0.02	2368.00x	yes	BV/sh $33.75, ROE (TTM) 0.0%, ke 9.3% (excluded from median)
Two-Stage Excess Return	Asset	$0.01	4736.00x	yes	5yr excess ROE then converge to ke=9.3% (excluded from median)
Discounted Future Market Cap	Growth	$44.18	1.07x	no	Rev $1.6B, growth 12% (input: historical growth; tapered), Terminal P/S: 2.8x / 3.3x / 3.9x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$0.96	49.33x	no	EPS $0.08, growth 7% (input: historical EPS growth), PEG=4821.24 (Overvalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	—	—	no	—
Residual Income	Asset	$0.01	4736.00x	yes	BV $33.75 + 5yr PV of (ROE (TTM) 0.0% − Kₑ 9.3%) × BV; BV grows 0.0%/yr (excluded from median)
Graham Number	Asset	$7.79	6.08x	yes	√(22.5 × EPS $0.08 × BVPS $33.75) — Graham's conservative floor
EV/EBITDA Relative	Relative	—	—	no	—
FCF Yield	Earnings	$28.83	1.64x	yes	FCF $382.9M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$6.11	7.75x	yes	SBC-adj FCF $0.15B (FCF $0.38B − SBC $0.24B) capitalized at Kₑ
Ben Graham Formula	Earnings	$1.47	32.22x	yes	EPS $0.08 × (8.5 + 2×6.7%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/B	Asset	—	—	no	—
P/Sales Sector	Relative	$113.62	0.42x	no	Revenue $1.60B × sector P/S 8.0x
PEG Fair Value	Relative	$0.81	58.47x	no	EPS $0.08 × (PEG 1.5 × growth 6.7% (input: historical EPS growth)) → PE 10.1x
Earnings Yield	Earnings	$0.86	55.07x	no	EPS $0.08 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net cash	$338.5m
Share count CAGR (dilution)	2.1%
Burning cash	no

Operating profit is negative or near zero and the company has no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so years-to-repay cannot be computed honestly.

Operating profit is negative or near zero and there is no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so interest coverage cannot be computed honestly.

Bullet Takeaways

• In May the company announced a workforce reduction of up to 30% alongside roughly $110 million of expected annualized savings, and made AI agents its top strategic priority.
• The moat is a directory rather than a product: once a supplier joins, "the supplier can accept and securely share its bank account details once with BILL. From that point onward, all payments to that supplier will be electronic."
• About a ninth of revenue is interest the company keeps on money that belongs to its customers, "approximately 11%, 13%, and 11% of our total revenue" across the last three fiscal years, so a falling short-term rate takes a bite out of the top line with no operating cause.

Bull Case

The asset here is not the software. It is the address book. When a small business pays a supplier through BILL, that supplier is invited onto the network, and the filing describes what happens next: "the supplier can accept and securely share its bank account details once with BILL. From that point onward, all payments to that supplier will be electronic." Every payment adds a verified banking relationship that the next customer inherits. Payment directories are among the few genuinely compounding assets in software, because the value of joining rises with the number who already have, and nobody rebuilds one for a cheaper subscription.

The scale is already meaningful. As of June 30, 2025 the company had "approximately 493,800 businesses using our solutions and TPV processed was approximately $329.8 billion, $292.4 billion, and $266.0 billion during fiscal 2025, 2024, and 2023, respectively." Payment volume rising by roughly a quarter across two years, from a base already in the hundreds of billions, is not a company still proving demand exists.

The economics of that volume are unusually clean. More than four fifths of each revenue dollar survives the direct cost of delivering it, which is the top of BILL's peer set rather than the middle: the software companies it is measured against generally keep less. That structure is why an operating loss at this stage is a spending decision rather than a business-model problem. The costs sitting between gross profit and operating profit are sales, engineering and general overhead, all of which management controls.

And management has just exercised that control at scale. In May the company announced a reduction of up to 30% of its workforce and roughly $110 million of annualized savings, while raising its full-year outlook and putting AI agents at the center of its plan, having already automated about 1.2 million invoices. That combination produced the first quarter of GAAP profitability in the company's history in the same period, on core revenue up 16% year over year. Cutting a third of the staff without cutting growth is the claim; one quarter is not proof, but it is the first evidence in the right direction.

There is a second revenue line most software investors would not think to look for. The company holds customer money while payments clear and keeps what it earns on the balance: "We recognize interest earned from funds held for customers as revenue. We do not pay interest to customers." That produced "$161.8 million, $167.4 million, and $113.8 million" across the last three fiscal years. It is a genuine economic benefit of sitting in the payment flow, and it costs almost nothing to produce.

The bear will say the competitive field is crowded, and the filing agrees that competitors range from enterprise-focused software firms to businesses with entrenched banking relationships. Fair. What the filing also says is that the incumbent to beat is not another vendor: "Our primary competition remains the legacy manual processes that SMBs have relied upon for decades." In a market where most of the volume is still paper, share is taken from inertia rather than from a rival's install base.

Bear Case

The competitive pressure that matters most does not come from another accounts-payable product. It comes from the distribution BILL does not own. The filing is candid that certain competitors "may also have long-standing exclusive, or nearly exclusive, relationships with financial services provider partners to accept payment cards and other services" and that rivals "may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, and customer requirements." Small businesses do not go shopping for payables software. They use what their bank or their accounting package puts in front of them, and the companies that own those front doors can bundle at zero incremental cost.

The growth numbers already show the squeeze. BILL's revenue has been compounding at roughly 12% to 13%. In the same cohort, ALKT is growing 32.9%, KVYO 30.3%, and BRZE 27.0%, all from smaller revenue bases. Even PCOR, at 14.9%, is ahead. When a company with the strongest network position in its group grows slower than most of the group, the network is not translating into pricing power at the moment it should.

Then there is the composition of the cash the bull case leans on. Free cash flow over the trailing year came to roughly 383 million dollars, which looks robust against a $4.9B market value. Subtract stock compensation of roughly 240 million dollars and what remains is nearer 150 million. Stock compensation is not an accounting nicety here; it is payment for labor settled in shares, and the share count has been rising about 2.1% a year for four years. The company has been buying stock back, including "2,260,397 shares of its common stock for $ 201.2 million" concurrently with a convertible note issue, which is the familiar arrangement where borrowed money offsets the dilution that pays the staff.

The float revenue cuts the other way too. Interest on customer funds ran "approximately 11%, 13%, and 11% of our total revenue" over three fiscal years and fell in absolute terms in the most recent one, from $167.4 million to $161.8 million. That line is a function of short-term rates, not of execution, and it flatters both the growth rate and the margin when rates are high. A revenue stream that a central bank can reduce is not the same quality as a subscription.

Now the price, and it asks for something specific. At about 3.3 times revenue, the price implies an eventual operating margin of roughly 32.6%. Alongside it sits a second and much quieter assumption, one that is easy to miss on a company that sells itself on expansion: revenue growth of only about 2.3% a year over the next several years. The market is not demanding heroic growth. It is demanding that a company currently running a trailing operating margin near negative 4.3% converts to one of the more profitable software businesses in its class. That conversion is exactly what a 30% workforce reduction is meant to deliver, which means the plan and the valuation are the same bet, and it has one quarter of evidence behind it.

None of the standard valuation families reaches the price. The methods that capitalize current cash generation land furthest apart from each other: on unadjusted free cash flow the price sits roughly half again above where they land, and once stock compensation is charged as the real cost it is, the price sits several multiples above them. That spread between adjusted and unadjusted cash is the whole argument in one number.

The balance sheet threatens nothing, and it does not carry the case either. Convertible borrowings sit near 1.8 billion dollars, and a substantial part of the liquid assets on the balance sheet is customer money in transit rather than corporate cash. The company is a licensed money transmitter in every state that requires it, which brings capital and liquidity obligations of its own.

Valuation

Most expensive software stocks are asking their buyers to believe in growth. This one is asking them to believe in a cost structure. At roughly 3.3 times revenue, the price implies BILL eventually earns an operating margin of about 32.6%. Sitting underneath that demanding profitability assumption is a strikingly undemanding one about scale, easy to miss on a company that sells itself on expansion: revenue growth of only about 2.3% a year for the next several years. The company is guiding to core revenue growth in the mid teens for the current quarter.

The 32.6% figure is not arbitrary. It is what the business would earn if it kept converting roughly 40% of its gross profit into operating profit at maturity, and the gross profit is genuinely high: more than four fifths of every revenue dollar survives the cost of delivering it. Nothing about the unit economics makes that margin impossible. Everything about the current income statement makes it distant, since the trailing operating margin is about negative 4.3%.

Two things about that solve deserve stating plainly. It is one calculation under fixed assumptions rather than a measurement, and it is sensitive to the discount rate: a single percentage point of cost of capital shifts the implied revenue growth by roughly five points. The reader should treat the shape of the conclusion as informative and the decimal places as not.

The methods disagree with the price rather than with each other. No family reaches $43.50. The most informative disagreement is inside the cash-flow lens, where the answer depends entirely on how stock compensation is treated. Capitalize unadjusted free cash flow of roughly 383 million dollars and the price sits about half again above that value. Charge the roughly 240 million dollars of stock compensation against it first, and the price sits several times above what remains. Since the share count has climbed about 2.1% a year over four years, the adjusted version is the one describing what accrues to an existing holder.

Two revenue lines with different qualities sit inside the multiple. Subscription and transaction fees are the core. Interest on customer funds is the rest, and the filing quantifies it at "approximately 11%, 13%, and 11% of our total revenue" across the last three fiscal years. Applying one multiple to both treats a rate-driven line as though it were a software line.

On solvency, the useful distinction is whose money is on the balance sheet. Customer funds in transit are large and belong to customers; the corporate structure carries convertible borrowings near 1.8 billion dollars against them. The company is not consuming cash and has no near-term funding problem. What it has instead is a valuation that already assumes the restructuring works, which is a different kind of exposure and one the balance sheet cannot cushion.

Catalysts

The May quarter reset the story. Total revenue was $406.6 million, up 13% year over year, with core subscription and transaction revenue up 16% to $371.1 million, and the company recorded its first quarter of profit on a reported basis. Alongside it came three announcements that matter more than the print: a workforce reduction of up to 30% expected to save roughly $110 million a year, a share repurchase authorization of up to $1.0 billion, and AI agents named as the top strategic priority, with about 1.2 million invoices already automated.

Those three moves are one decision. Cutting a third of the workforce is only survivable if software absorbs the work, and buying back stock at that scale only makes sense if management believes the savings are durable. The company simultaneously raised its full-year outlook, guiding to total revenue of $1.642 billion to $1.652 billion for fiscal 2026 and $425 million to $435 million for the June quarter.

The June quarter closes the fiscal year, and it is the first period to carry the reduced cost base for its full length. Two things are worth separating when it reports: whether core revenue growth held in the guided range of 13% to 16%, and whether customer counts and payment volume kept rising while a third of the staff left. Growth holding through a restructuring is the entire bull case in observable form. Growth slipping while costs fall would say the two were connected after all.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• VERX (Vertex, Inc.)
• FY2025 10-K: …our competitors who currently focus their tax compliance services on small- to medium-sized businesses may be better positioned to increase their market share with small- to medium-sized businesses and may choose to enter our markets, whether competing based on price, service or otherwise. We also face a growing…
• FY2025 10-K: ​ ​ Research and development ​ 11.2 % ​ 10.0 % Selling and marketing ​ 26.3 % ​ 25.6 % General and administrative ​ 23.9 % ​ 22.9 % Depreciation and amortization ​ 3.3 % ​ 3.1 % Change in fair value of acquisition contingent earn-outs ​ (2.3) % ​ 2.6 % Other operating expense (income), net ​ 1.7 % ​ - % Total…
• PCOR (Procore Technologies, Inc.)
• FY2025 10-K: …their needs through focus groups at our innovation labs, trade shows, and conferences (including Groundbreak), and with customers and collaborators on the jobsite. Our Competition The market for construction management software is competitive and rapidly evolving. We believe the market is in its early phases of…
• FY2025 10-K: …commissions, and bonuses. Additionally, cost of revenue includes non-personnel-related expenses, such as third-party hosting costs, amortization of capitalized software development costs related to our platform, amortization of acquired technology intangible assets, software license fees, and allocated overhead. We…
• KVYO (Klaviyo, Inc.)
• FY2025 10-K: …programs, such as Customer Success at Scale, Voice of the Customer, and dedicated Customer Success Managers for our largest customers. With this ongoing feedback, we can continue to make impactful improvements to our platform and to the customer experiences we offer. Competition The market in which we compete is…
• FY2025 10-K: Financial Statements. Cost of Revenue Our cost of revenue primarily consists of cloud-based infrastructure costs, outbound communication sending costs, employee-related costs including payroll, benefits, bonuses, and stock-based compensation expense related to our customer support team, amortization of capitalized…
• SEMR (Semrush Holdings, Inc.)
• FY2025 10-K: 5 % Purchases of property and equipment (as a percentage of revenue) (0.4) % (1.0) % Capitalization of internal-use software costs (as a percentage of revenue) (3.4) % (2.1) % Free cash flow margin 9.7 % 9.4 % Components of our Results of Operations Revenue We generate nearly all of our revenue from subscriptions to…
• FY2025 10-K: …may bundle their solutions with other companies' offerings to provide a broader range of functionality at reduced volume pricing. Similarly, certain competitors may use marketing strategies that enable them to acquire customers at a lower cost than we do. Even if such competitive products do not include all the…
• BRZE (Braze, Inc.)
• FY2025 10-K: …and for professional services upfront. Cost of Revenue Cost of revenue consists of direct costs related to providing platform access to our customers and to performing onboarding and professional services including consulting services. These costs primarily include payments to third-party cloud infrastructure…
• FY2025 10-K: …Teams, customers can create groups to manage individual regions or subsets of their businesses while restricting the ability of specified users to view or manage data outside of their assigned region. We also integrate with a variety of identity providers for single-sign-on or user account provisioning and provide…
• TENB (TENABLE HOLDINGS, INC.)
• FY2025 10-K: …profit to increase in absolute dollars but our gross margin may fluctuate from period to period depending on the interplay of all of these factors, particularly as it relates to cloud infrastructure costs, as we expect revenue from our cloud-based subscriptions to increase as a percentage of revenue. 54 Table of…
• FY2025 10-K: Frequent updates from Tenable Research ensure the latest vulnerability checks, zero-day research, and configuration benchmarks are available within our exposure management solutions. We believe ongoing and timely development of new products and features is imperative to maintaining our competitive position. We…
• ALKT (ALKAMI TECHNOLOGY, INC.)
• FY2025 10-K: …Because competition for key employees is intense, we may not be able to attract and retain the highly skilled employees we need to support our operations and future growth. Competition for executive officers, software developers and other key employees in our industry is intense. In particular, we compete with many…
• FY2025 10-K: L to certain historical developed technology, customer relationships and capitalized developed software assets. Non-operating Income (Expense) Non-operating income (expense) consists primarily of interest income from our cash balances, interest expense from borrowings under our Revolving Facility and 2030 Convertible…
• INTA (Intapp, Inc.)
• FY2025 10-K: …administrative at the consolidated level to manage the Company's operations, which are identified as significant segment expenses. Since the Company operates as a single operating and reportable segment, these significant segment expenses are the costs and expenses presented on the consolidated statements of…
• FY2025 10-K: …Many of the companies with which we compete for experienced personnel have greater resources than we have. We may incur significant costs to attract, train and retain such personnel, and we may lose new employees to our competitors or other technology companies before we realize the benefit of our investment after…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

BILL fiscal Q3 2026 results, May 2026 · BILL fiscal Q3 2026 results and earnings call, May 2026 · BILL fiscal Q3 2026 outlook, May 2026