What happened
In a down month for the stock market, Bill.com Holdings (BILL -1.42%) bucked the trend, rising 19.8% in August, according to S&P Global Market Intelligence.
The cloud-based financial software company beat the S&P 500, which was down 4.2% in August. The Dow Jones Industrial Average (-4.1%) and the Nasdaq Composite (-4.6%) were also down last month. Bill.com's stock price is still down 40% year to date as of Sept. 6, trading at around $149 per share.
So what
Bill.com got a huge boost in August from its excellent fiscal fourth-quarter earnings report, released on Aug. 18. The company beat earnings and revenue estimates, and the stock price soared about 17% on release day, representing the bulk of the stock's gain for the month.
The company had a non-GAAP (adjusted) net loss of $0.03, which was better than the $0.07 net loss a year ago this quarter and significantly better than the $0.13 net loss anticipated by analysts. Revenue surged to $200 million in the quarter, marking a 156% increase over the same quarter a year ago. Bill.com processed $60.7 billion in total payment volume for its customers, a year-over-year increase of 46%, as it expanded its services and reach to include not just small companies but more mid-sized companies as well.
In addition, the stock surged higher as several investment banks, including J.P. Morgan, Wells Fargo, and Keefe Bruyette & Woods (KBW) raised their price targets on Bill.com's strong quarter and its positive guidance for its current fiscal year. KBW was the most bullish, raising the target from $245 to $269, which would represent a 77% increase over current levels.
Now what
Bill.com's growth has not slowed in this economic downturn because many small- and mid-sized companies are outsourcing their back-office functions to save money. And the company expects that growth to accelerate in its current fiscal year as we head into a period where macroeconomic uncertainty persists.
The company calls for $208 million to $211 million in revenue in its first fiscal quarter ending Sept. 30 -- an increase of 76% to 78% year over year. It also expects to be profitable on a non-GAAP basis, with non-GAAP earnings per share (EPS) projected to be in the range of $0.05 to $0.07. For the full year, Bill.com sees revenue in the range of $955.5 million to $973.5 million -- which would be a 49% to 52% year-over-year increase -- while non-GAAP EPS is projected to be $0.23 to $0.38 for fiscal year 2023.
Despite its 40% year-to-date drop in stock price, Bill.com is still very highly valued with a price-to-sales ratio of 23. But overall, it seems to be headed in the right direction.
