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Why Stock Was Spiking Today

By Jeremy Bowman - May 7, 2021 at 3:09PM

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Shares of the back-office fintech company jumped on a strong earnings report.

What happened

Shares of (BILL 3.84%) were climbing today after the back-office software company posted strong third-quarter results, beating analyst estimates, and said it would acquire Divvy, a privately held leader in spend management for small and medium-sized businesses (SMBs), for $2.5 billion.

As a result, the stock was up 15.7% as of 1:38 p.m. EDT.

A woman working on her computer with a calculator and pen visible

Image source: Getty Images.

So what, which makes cloud software that helps companies handle back-office accounting and billing, said core revenue jumped 62% to $58.6 million, while overall revenue, which includes the interest on funds held for customers, rose 45% to $59.7 million. That was well ahead of the analyst consensus at $54.6 million.

Subscription fees rose 32% to $29.3 million, while transaction fees jumped 112% to $29.3 million, showing its SMB customers are using its platform more. Its adjusted loss of operations expanded as interest revenue fell in the quarter and the company continued to invest in areas like research and development. On the bottom line, its adjusted loss per share narrowed from $0.03 to $0.02, which was ahead of a loss of $0.07 per share. The company has now reached an annual run rate of $140 billion in payment processing, showing the size of the volume it's handling.

CEO Rene Lacerte said, "We delivered record results and further increased core revenue growth, driven by the value of our platform, the scale of our network, and the broad range of our payment offerings."

Separately, the company said it would take over Divvy in a cash-and-stock transaction that will expand the market opportunity for both companies, and enhance the company's ability to provide value for its customers.

Now what

Looking ahead, offered strong guidance for the fourth quarter, calling for revenue growth of 45%-47% to $60.9 million-$61.9 million, which was ahead of the analyst view of $57.3 million. It expects core revenue to jump 56%-58%, and sees adjusted per-share loss of $0.05-$0.04, ahead of expectations at a $0.07.

With a flexible software-as-a-service (SaaS) model, should continue to produce steady growth as it tackles a massive addressable market in back-office payments that will only get bigger following the Divvy acquisition.

Jeremy Bowman owns shares of Holdings, Inc. The Motley Fool owns shares of and recommends Holdings, Inc. The Motley Fool has a disclosure policy.

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