The stock market is on shaky ground right now as investors digest higher interest rates and geopolitical tensions in Europe. The Nasdaq 100 technology index briefly dipped into bear-market territory in March, with a decline of more than 20% for 2022, and although it has bounced back slightly, it's still down about 15% for the year.
It's, therefore, more important than ever to play the long game. Focusing on an investment horizon of 5-10 years significantly increases the chance of generating a positive return and, in some cases, a life-changing one.
Bill.com (BILL -0.54%) is a financial technology (fintech) company with soaring revenue growth, and its addressable market suggests it has only just begun to tap its potential.
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Serving small businesses
Bill.com's flagship platform centers on its digital inbox technology designed to simplify the accounts payable process for small to mid-sized businesses. The paper trail can get tricky to manage for smaller enterprises that might not have full-time bookkeeping or accounting staff, and Bill.com aims to ensure invoices don't get lost, misrouted, or forgotten.
When a business loads invoices into Bill.com, it can pay them in a single click. And thanks to integrations with key accounting software platforms, Bill.com also logs the transactions automatically in the books.
The company has had enormous success amassing 135,000 business customers, but it began aggressively expanding into new verticals in 2021 through two key acquisitions. It purchased Invoice2go, a platform technology that helps businesses manage accounts receivable, and Divvy, a budgeting and expense management software.
That makes Bill.com a closed-loop provider for all business payment needs, whether sending or receiving money. That's important because the company's largest source of revenue is generated by taking fees based on transaction volume.
How Bill.com stock could grow 10x in the long run
It all starts with the company's gigantic addressable market. The two charts below depict Bill.com's current position compared to its domestic and global opportunities in terms of total payment volume and customer base.
Clearly, Bill.com has only captured a fraction of its $125 trillion global addressable market for payment volume. On a trailing-12-month basis, the company has processed $181 billion in transactions, leaving room for 69,000% growth in the unlikely scenario it took the entire market.
But theoretically, Bill.com may only need to increase its annual payment volume to $1.81 trillion for its stock to grow tenfold, assuming its current valuation metrics remain constant (its price-to-sales ratio, for example).
On the customer side, Bill.com has an enticing pool of 70 million businesses around the world to go after. As mentioned, 135,000 businesses have joined its flagship platform, but thanks to the acquisitions of Invoice2go and Divvy, that figure now stands at 373,500 -- supercharging the company's growth potential.
Bill.com is already charting a path to the top, on track to grow its revenue almost tenfold in the last five years alone, assuming it meets its fiscal 2022 projections.
| Metric | Fiscal 2018 | Fiscal 2022 (Guidance) | CAGR |
|---|---|---|---|
| Revenue | $65 million | $600 million | 56% |
Data source: Bill.com. Chart by author. CAGR = compound annual growth rate. Bill.com's fiscal year ends June 30.
Bill.com's stock price is down by 43% from its all-time high amid the broader tech sell-off, so now might be the perfect moment to buy with a long-term horizon. If its current growth trajectory continues, a 10x return might even be conservative, looking back a decade from now.