Bill.com (BILL 4.06%) didn't receive much coverage in the financial press for most of this year as the market obsessed over the much-touted "Magnificent Seven." When it did get the spotlight, it was due to a gut-wrenching share-price plunge.
For the past couple of years, the provider of cloud-based billing software and owner of the website that bears its name has been a pariah on Wall Street. This got my contrarian instincts tingling, and already there are signs that Bill.com stock could turn out to be the comeback story of the year -- not in time for 2023, but 2024's tale hasn't been written yet.
A one-two punch to the Bill.com bulls
Early November was memorable for Bill.com's shareholders, but not in a positive way. It was absolute carnage as Bill.com stock plunged from nearly $90 to $56 in a matter of days.
NYSE: BILL
Key Data Points
The catalyst, it seems, was a double shot of adverse events. First, stock traders reacted negatively when Bill.com denied reports that it planned to acquire Melio Payments. This buyout might have set Bill.com back $1.95 billion, so it's not necessarily a bad thing that the deal wasn't real, but evidently the market didn't see it that way at the time.
Then Bill.com released its results for the first quarter of fiscal 2024 ended Sept. 30. The bottom fell out of Bill.com stock, most likely because the company forecast current-quarter revenue of $293 million to $303 million; Wall Street, meanwhile, called for $318.6 million.
Since then, Bill.com stock has been on what appears to be a slow but steady path to recovery since early November. Undoubtedly, a contributing factor has been the market's optimism that the Federal Reserve will cut interest rates multiple times next year. This consensus belief has put the market in a generally good mood, and the rising tide is apparently lifting Bill.com's boat.
Job cuts and the half-full glass
In a sign that Bill.com stock's recovery might stick, the market didn't panic-sell the shares when Bill.com recently disclosed a workforce reduction of roughly 15%. This could be a signal that investors are willing to let Bill.com out of the doghouse -- and besides, a slimmed-down Bill.com has the potential to be more profitable in 2024.
Speaking of profitability, a second look at Bill.com's Q1 FY2024 results suggest that the company's bottom-line results were actually pretty decent. The company reported non-GAAP (adjusted) net income of $0.54 per diluted share, a huge improvement over the $0.14 per share in the year-earlier quarter and above the $0.50 per share that analysts had expected. With that result, Bill.com maintained its 2023 track record of consistent non-GAAP profitability and quarterly earnings beats.
Turning to the top line, Bill.com raked in quarterly revenue of $305 million, up 33% year over year and above Wall Street's estimate of $298.8 million. In other words, perhaps it's time for critical investors to revisit Bill.com's quarterly report with a glass-half-full perspective, or at least not a glass-completely-empty one.
Sure, Bill.com's current-quarter outlook disappointed the company's shareholders, but the steep stock-price plunge suggests that the market has already expressed its consternation. Now shock and horror can give way to forgiveness, especially since Bill.com's apparent fiscal sins weren't unforgivable in the first place.
Bill.com's shareholders may have been overbilled and be due a hefty refund in 2024. If the company's current-quarter financials aren't terrible and central-bank policy is as accommodative as the market thinks it will be, Bill.com stock's bull run could be nothing short of spectacular.
