Shares of Bill.com (BILL 3.81%) were climbing today after the maker of cloud-based software for back office operations in small and medium-size businesses turned in better-than-expected second-quarter earnings.
As of 12:31 p.m. EDT Friday, the stock was up 12.6%.
Revenue rose 50% in the quarter to $39.1 million, the company's first report since it went public in December. That easily beat estimates at $33.8 million. Subscription and transaction revenue was up 61% to $33 million, while interest on funds held for customers rose 10% to $6.1 million.
Customer count rose 20% to 85,900, and total payment volume rose 41% to $24.8 billion. Core profitability improved as adjusted gross margin rose from 75.8% to 78%, but fixed expenses outgrew revenue. On the bottom line, it posted an adjusted loss of $0.06 per share, versus a profit of $0.01 in the quarter a year ago. That result was still better than estimates of a $0.08 loss.
CEO Rene Lacerte said:
I am very happy to report that in our first quarter as a public company we posted strong results. Our performance this quarter was highlighted by solid revenue growth and expansion of non-GAAP gross margins. Customers continue to leverage the platform to automate their financial operations, resulting in accelerating core (subscription and transaction) revenue growth year-over-year.
In its third-quarter outlook, the company expects revenue of $38 million to $38.7 million, well ahead of estimates at $34.4 million, and sees full-year revenue of $150.3 million to $151.7 million, compared with the consensus at $140.6 million.
Bill.com had surged in its IPO in December and is now up about 150% from its $22 IPO price. With strong revenue growth and a promising niche in software as a service, Bill.com could have a bright future. But the stock is expensive at a price-to-sales ratio of around 25 based on this year's revenue estimates.