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Why Bill.com Stock Was Gaining Today

By Jeremy Bowman – Updated Feb 7, 2020 at 2:01PM

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The cloud company jumped in its first public earnings report.

What happened

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%.

A man working with a calculator and documents in an office

Image source: Getty Images.

So what

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.

Now what

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.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Bill.com Holdings, Inc. Stock Quote
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