What happened

Shares of Bill.com Holdings (BILL -2.25%) fell as much as 26.6% this week, according to data from S&P Global Market Intelligence. The software provider that helps small businesses manage their cash flows posted its quarterly earnings, and Wall Street was disappointed in the results. As of 2 p.m. ET on Friday, Nov. 4, the stock is down 24.8% this week. 

So what

Bill.com reported its quarterly earnings on Nov. 3 after the market closed. Revenue grew 94% year over year in the period to $229.9 million, which was greatly ahead of analyst expectations for $210 million. Management said the company had a record number of net adds in the quarter and that it now helps over 400,000 businesses manage their finances. Over the long term, executives think the company can work with millions of small and medium-sized businesses (SMBs), growing alongside them. This can provide revenue growth for many years into the future. At its current growth rate, Bill.com is well on its way to doing billions of dollars in revenue a year.

One thing that Bill.com is lacking is profitability. Operating loss was $88 million last quarter, up from a year earlier. With over $1.6 billion in cash on the balance sheet and rapid revenue growth, this shouldn't be a huge concern for long-term investors. However, in the current market environment investors are becoming very pessimistic about unprofitable software companies, regardless of how fast they are growing or how strong their unit economics are (Bill.com has a gross margin of 80%, making it best in class for software businesses). Seeing as Bill.com's operating loss grew last quarter, it is no surprise the stock is down big this week. 

Now what

After the current price drop, Bill.com's stock is now down 65% over the past year and trades at a market cap of $10.7 billion. It still looks expensive relative to its trailing-12-month revenue, which is under $1 billion, and the lack of profitability is a concern. 

However, if you have a longer time horizon, Bill.com could be a great investment at these prices. Annual revenue is on pace to pass $3 billion within three to five years if growth continues at a high-double-digit rate, and with a high gross margin that should lead to strong underlying profitability. There may be more downside ahead in the near term, but if you hold your nose, now could be a great time to buy Bill.com if you plan to hold for five years.