Bill.com: Grabbing Market Share In The SMB Back-Office Software Industry (NYSE:BILL)

Background Information and Investment Thesis

Bill.com (BILL) provides a cloud-based software that automates back-office financial operations for small and medium-sized businesses (SMBs). Its platform allows SMBs to digitize their entire business transaction lifecycle: collecting accounts receivable and disbursing accounts payable. BILL primarily collects revenue from subscription fees and transaction fees. Additionally, the company generates float revenue through interests earned on customer funds as customer payments are clearing.

In FY 2020, BILL delivered a solid financial performance, with total revenue at USD 157 million (at a CAGR of 56% since 2018) and gross profit at USD 118 million (a CAGR of 61% since 2018). As a result the stock has returned 190% since going IPO in December 2019. Although current trading multiple of 48x EV/Revenue shows BILL is trading at a premium, we believe BILL is worth a buy due to the following reasons:

  1. Leader in the SMB back office financial
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