BILL Holdings, Inc. 2026 Q4 Earnings Call

Good afternoon, everyone. Welcome to BILL's fiscal fourth quarter 2026 earnings conference call. We issued our earnings press release a short time ago and filed the related Form 8-K 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 René Lacerte, Chairman, CEO, and Founder, and Rohini Jain, CFO. Our remarks today include forward-looking statements about our business, products, and expectations that involve many assumptions, risks, and uncertainties. Actual results could differ materially from those expressed or implied by such statements. On today's call, we will also refer to both GAAP and non-GAAP financial measures. Please refer to our earnings press release and investor presentation posted today, and to our periodic reports filed with the SEC for additional information about such risks and uncertainties and for reconciliations of non-GAAP measures to GAAP.

With that, let me turn the call over to Rene.

Thanks, Jack. Good afternoon, everyone, and thank you for joining us. Q4 was one of the most significant quarters in the history of BILL. We completed the significant organizational changes required to accelerate our transformation to be an AI-native company. We sharpened our view of the highest impact actions that power our growth, and at the same time, we drove good overall business performance in the quarter. Core revenue grew 16% year over year, while our non-GAAP operating margin exceeded 23%. With increased activity in the industry, it's clear that BILL's value proposition of an integrated platform continues to resonate with SMBs. I'll first recap the highlights from Q4, then provide an update on our new organizational structure, and then introduce our key priorities for FY 2027. As I shared on our last earnings call, innovating with AI represented our top priority during the past fiscal year.

We continue to see strong momentum and adoption of our AI capabilities among our customer base. To date, we have had over 175,000 businesses using our agents to improve their financial operations across S&E and AP. The number of organizations using our W9 agents more than tripled sequentially to over 40,000. As a result, we have collected over 240,000 W9s with zero work from our customers. This agent handles outreach, collection, and validation with the IRS without anyone touching it, eliminating a job nobody wanted in the first place. Next up, BILL's invoice coding agent, which launched in February, has already been used by over 60,000 companies to eliminate around 90% of the coding steps for a multi-line invoice. This has generated significant time savings, reducing the processing time across our AP customers by nearly half.

In addition, our touchless transactions agent became generally available at the end of April to all of our Spend & Expense customers. Already, it has automated more than 7 million transaction fields for 30,000 customers. Lastly, our Pay For You agent became generally available at the end of Q3 and completed over 30,000 card transactions without any human interaction during Q4. These examples are just some of the many AI capabilities we have and are building for customers. Given these successes, we are excited to launch major new AI-powered functionality over the coming months. The value to BILL and its customers from this technology will come from better business outcomes with greater speed, control, and efficiency. AI success is all about this, period. It is easy to drive agent creation and code completion, but it takes great domain expertise to build products that customers never knew they wanted or needed.

Our domain expertise and scale is long established. Customers know that we have built our platform to deliver better business outcomes, and that has built a brand trusted by businesses everywhere. We are making these AI investments to extend the significant value creation for SMBs that we are known for. It will help them save more time, maximize financial performance, and leverage AI with confidence. As a result, customers will spend more time on strategic work, catch risks that would otherwise been missed, and focus on growing their businesses. Our commitment to constantly innovating and delivering software that optimizes and executes the workflows and decisions that run the financial operations for our customers has a real impact. They trust us. Let me share a customer quote from Matthew May, National Accounting Managing Partner at Sora, a large accounting firm.

We handle some of the world's most sensitive data, so our philosophy is always security first. Rather than using generic AI tools, we trust solutions from vetted tech partners like BILL, who've proven their security with our clients' financial information. AI is an enabler, but only with guardrails and the right partnerships augmenting expertise and trust." When it comes to financial operations, trust is a critical factor in the purchasing decision. That trust is helping our integrated platform gain strong traction among the fastest-growing segments of SMB spend, AI-first businesses, technology services, and professional services firms. These firms are scaling quickly and need financial infrastructure that keeps pace. Customer spend on AI through BILL grew over 50% year-over-year in Q4, and TPV from our AI-first customers nearly doubled from Q3 to Q4.

AI is not only a game changer for our customers, but it is critical to how we build and operate at scale inside of BILL. We are driving more and more internal efficiencies while improving execution across the entire company. One use case is having a direct impact on our financial results. A few quarters ago, we introduced a new AI underwriting model to assist with our invoice financing applications. This new model is built on signals and patterns based on how businesses pay and receive payments within the BILL network over time. Relationship-level data allows the model to assess invoice-level risk with a precision not replicable from traditional credit bureaus. We are seeing a material impact on our invoice financing business. Both volume and revenue grew approximately 30% year over year in FY 2026, while the expected loss rate has improved by more than 50%.

This is a strong illustration of two of BILL's key moats, our massive proprietary data set and our network. As more and more transactions are executed on our platform, our models get smarter, our risk selection improves, and we can extend more credit at better economics for the customer and us. This is a compounding advantage that grows with scale. Next, I'd like to provide an update regarding a number of organizational changes we completed during Q4. Over the last fiscal year, we have been working diligently and intently on structuring BILL for our next phase. We significantly simplified and reduced layers across the entire company. In addition, we moved from a hybrid general manager structure to a functional model. The imperative to become an AI-native organization, combined with driving speed of execution on the initiatives that drive results across the business, is the primary motivation for these changes.

We are moving fast with strong accountability and end-to-end ownership in order to drive velocity, impact, and growth. Simply stated, we've built BILL to achieve what it needs to in the future. During Q4, we made some deliberate leadership changes to support this direction. I was pleased to welcome Jonathan Leaf to BILL as our new Chief Revenue Officer. Jonathan has a strong background and track record in scaling revenue organizations to serve lower and mid-market companies. He is responsible for all aspects of our go-to-market organization. In addition, Mike Cieri, who joined BILL last year, has been promoted to Chief Product Officer. He now leads the end-to-end platform experience spanning software solutions, payments, and financial services. This structure reflects how customers use all of BILL's capabilities together across a single integrated platform. Finally, Eric Chan has been appointed Chief Technology Officer.

As BILL's founding engineer, former CTO, and Chief Architect, Eric has exceptionally strong knowledge of our technology, the team, the current technology landscape, and operates with the speed this moment requires. We've done the work to assemble the right team, and are focused, energized, and positioned to win in our market. Entering FY 2027, we are focused on the following three strategic priorities. Our first and most important priority is to deliver AI-native experiences for our customers. Because this is our top priority, I'd like to spend a moment on what that means for BILL. Achieving an AI-native experience means that AI is so deeply embedded that removing it would make the product no longer work. Our success with over 175,000 customers leveraging AI capabilities is compelling.

We are making a strategic pivot to an agentic platform that automates financial operations out of the box by default for our nearly 500,000 customers. We are building new front-end experiences that remove friction so that customers can instantly realize value from AI. Our knowledge of SMB-specific pain points and workflows, combined with our proprietary data advantage, our network of over 9 million members, and our robust payments infrastructure, creates a powerful foundation to build trusted, accurate, secure AI solutions specifically aimed at the Fortune 5 million. Our second priority is to acquire higher ROI customers. One of the key areas of focus here is driving multi-product adoption. In Q4, the number of joint customers leveraging both of our AP and S&E solutions grew 35% year over year. Those who were customers both in Q4 and a year ago exhibited a net revenue retention of 111%.

Given the success we have seen, we have made a change to our go-to-market strategy in FY 2027. The entire sales team is now trained to sell BILL as a single platform rather than individual components. This is how we will engage with customers and prospects moving forward. Our Embed 2.0 strategy represents an efficient channel opportunity. We believe there is a large market for software companies interested in deploying our embedded finance solutions to support the financial operation needs of their clients. We are gaining traction with our embed partners. As an example, one of our embed partners, TPV, and units more than tripled sequentially from Q3 to Q4. In focusing on higher ROI go-to-market activities, we have made the decision to align our bank channel efforts with BILL's broader embedded strategy. We are investing in scalable, standardized, embedded solutions.