BILL - NYSE

Good afternoon. My name is Tamiya, and I will be your conference operator today. At this time, I would like to welcome everyone to Bill.com Holdings, Inc.'s Fiscal Fourth Quarter and Fiscal Year 2025 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. I will now turn the call over to June Wong, Director, Investor Relations. You may begin your conference.

Thank you. Good afternoon, everyone. Welcome to Bill.com Holdings, Inc.'s fiscal fourth quarter 2025 earnings conference call. We issued our earnings press release a short time ago and filed the related Form 8-K with the SEC. The press release can be found on our investor relations website at investor.bill.com. Joining me on the call today are Rene Lacerte, Chairman, CEO, and Founder; John Rettig, President and COO; and Rohini Jain, CFO. Before we begin, please remember that during the course of this call, we may make forward-looking statements about the future business, operations, targets, products, and expectations of Bill.com Holdings, Inc. that involve many assumptions, risks, and uncertainties. Actual results could differ materially from those expressed or implied by our forward-looking statements. In addition to our prepared remarks, please refer to the information in the company's press release issued today, our Q4 2025 investor deck, and our periodic reports filed with the SEC, including our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. We disclaim any obligation to update any forward-looking statements. On today's call, we will refer to both GAAP and non-GAAP financial measures. Please refer to today's press release for a reconciliation of GAAP to non-GAAP and additional information regarding these matters. With that, let me turn the call over to Rene. Rene?

Thanks, June. Afternoon, everyone. And thank you for joining us. Fiscal 2025 was a pivotal year for Bill.com Holdings, Inc. as we executed well against our innovation agenda. We launched new software and payment products, made strategic investments to drive future growth, and drove significant profitability expansion. We have a big opportunity in front of us. The investments we made in fiscal 2025, along with our durable and diversified business model, set the foundation for us to continue to expand profitability and accelerate revenue growth in the years ahead. During the call today, we will share our recent progress and outline our plans to deliver greater value to shareholders. In Q4 and throughout fiscal 2025, Bill.com Holdings, Inc. strengthened our platform, increased our scale, expanded our market opportunity to serve larger, more complex businesses, and strategically invested in delivering financial operations agents for small and midsized businesses to accelerate Bill.com Holdings, Inc.'s growth and category leadership. Three key highlights from our fiscal 2025 include, first, growing total revenue to $1.5 billion with core revenue growth of 16% year over year. Second, continued our track record of profitability improvements while also investing in key areas. This resulted in non-GAAP operating income exceeding the high end of our initial fiscal 2025 guidance by over 20%. Third, we built our agenda AI platform that leverages the capabilities, data, and scale acquired over the last twenty years across millions of SMBs and over $1 trillion in spend, so that we can launch intelligent finance agents quickly and safely at scale. We are excited to leverage our platform and will start rolling out our suite of financial operations agents to customers in 2026. At Bill.com Holdings, Inc., we are not just building software and payments infrastructure. We are redefining the future for how the Fortune 5,000,000, the millions of small and midsized businesses that power the US economy, will manage, move, and maximize their money in order to grow and win. Bill.com Holdings, Inc. serves more SMBs and accounting firms than anyone in our category. We are the trusted platform of choice for nearly half a million small and midsized businesses and over 9,000 accounting firms, including nearly 90% of the top 100 accounting firms across the US. Throughout FY 2025, we continued to strengthen our platform. We launched amazing new products that create new value for our customers and their suppliers, extended our advantage through our powerful two-sided network, drove new monetization, and strategically increased our market opportunity. In Q4, we launched Supplier Payments Plus, previously referred to as Advanced ACH, which streamlines millions of payment transactions from SMBs and simplifies incoming payments at scale for suppliers. Supplier Payments Plus leverages Bill.com Holdings, Inc.'s expertise of unifying software and payments to solve a critical problem for suppliers managing thousands of disparate weekly payments from millions of SMBs. With Bill.com Holdings, Inc., large suppliers can now do reconciliation at scale and convert the thousands of paper checks sent by their small business customers directly into faster digital payments with rich remittance data. This speeds the collection cycle, significantly reduces manual reconciliation efforts, which is much better for suppliers and for SMBs. This product will allow us to move from a flat fee ACH transaction paid by the buyer to an ad valorem fee paid by the supplier. The value proposition resonates across industries, with companies ranging from a national law firm to a global environmental and waste management company. Businesses are using Supplier Payments Plus to optimize their receivables from thousands of SMBs. In Q4, we delivered new products for midsize and complex businesses through the launch of Bill Procurement, which combines AP, AR, spend and expense procurement, and forecasting in a single intelligent platform, giving businesses control of their cash flow in one seamless experience. Our customers gain speed and control through automation, and the power of integrated payments all in one place. We also launched bulk payment capabilities, enhanced our multi-entity workflows, and introduced more solutions for businesses and accounts to embed Bill APIs into their existing systems so they can tailor financial workflows based on their preferences and unique needs. These APIs are part of our Embed 2.0 strategy. Overall, we continue to make strong progress on driving demand for our embedded products, which John will cover later. The Bill network, consisting of our customers and suppliers they pay, is the only one of its kind in our category, and it provides an unmatched advantage. We recently hit a new milestone, surpassing 8 million members, an increase of 18% from the previous year. As more businesses and suppliers join the Bill network, transactions get faster, more secure, and more efficient. As our network has grown, payment volume within the network has also increased. Today, 54% of payments on Bill occur seamlessly between the payer and the receiver on our network, providing customers and suppliers with full visibility into both sides of the transaction and more options to choose payment methods that match their needs and preferences. As our network grows, our data advantage grows with it. Not only the scale of our data asset, but also the depth and richness of the intelligence and insights we have into the businesses that make up the SMB economy. It's this unique combination of scale and insights that positions Bill.com Holdings, Inc. to win the category for intelligent financial operations. Bill.com Holdings, Inc. is already a leader in delivering predictive and generative AI features to SMBs and accounts. Currently, more than 40,000 customers benefit from two or more AI features on our platform. More than 1.3 billion documents have been processed on Bill.com Holdings, Inc.'s platform, including nearly 500 million documents through our AI features and the Bill Intelligent Virtual Assistant. The scale and richness of our data provide a significant advantage in training our models to deliver new strategic finance capabilities and intelligence that SMBs cannot access on their own or through other platforms. Bill.com Holdings, Inc. is saving businesses valuable time. Since the beginning of 2025, Bill.com Holdings, Inc.'s AI solution has increased the number of fully automated bills by 80%. We are also increasing access to capital, which is critical to the success of SMBs. In fiscal 2025, our AI features helped us to proactively identify when customers qualified for larger credit limits, enabling us to extend $200 million in proactive line increases for spend and expense customers. And Bill.com Holdings, Inc.'s AI-enabled fraud solutions protect the most important asset SMBs have, their cash. In FY 2025, our predictive AI solutions helped us stop over 8 million fraudulent attempts. Bill.com Holdings, Inc.'s platform is proactive, predictive, and acts as the intelligence layer that powers financial operations across SMBs. We are investing in AgenTeq AI, building a new generation of intelligent agents that will deliver autonomous finance for SMBs and accelerate the shift from doing it with you to doing it for you. To be clear, we are not just adding AgenTeq AI into workflows. We are eliminating the workflows themselves. Our first agents will transform how our SMBs complete critical business tasks, paperwork, documentation, and onboarding of vendors. We are also building new agents that provide additional security to keep money safe and flowing faster. We firmly believe our AgenTeq AI initiative will further improve customer retention, accelerate multiproduct adoption, and fuel customer acquisition as a result of the increased value we deliver. By the end of fiscal 2026, we expect the majority of customers will be using at least one Bill agent in addition to our AI solutions, extending Bill.com Holdings, Inc.'s leadership in delivering AI and strategic financial capabilities to SMBs. At Bill.com Holdings, Inc., we are shaping the future across all dimensions of financial operations for SMBs and carrying strong momentum into fiscal 2026 to deliver greater value to our customers, suppliers, partners, and shareholders. Over the past year, we have added exceptional new talent to our executive team. Most recently, we welcomed Rohini Jain as Bill.com Holdings, Inc.'s CFO. She is a standout global finance leader and has a strong track record for enabling growth and scaling top technology in Fortune 5 companies. We also added Michael Cherry as EVP and GM of software solutions in the fourth quarter. Mike, combined with Mary Kay Bowman, EVP and GM of payments and financial services, completes our team to align the strategy and execution around software and payments. In closing, we are operating at massive scale. More than 1% of US GDP flows through our platform annually. That's a staggering number. It's a reflection of the trust our customers and suppliers place in us to move their money, automate their workflows, and give them visibility and control over their financial operations. And with Bill.com Holdings, Inc.'s network, we have built one of the most comprehensive and real-time financial maps of the SMB economy. We continue to leverage our scale and customer interactions to develop groundbreaking innovations. We are excited to simplify the lives of SMBs and accountants by harnessing the power of AI. We see a future where every business, regardless of size, has access to a strategic finance function from anywhere on any device. We believe our focus on serving the Fortune 5,000,000 with our intelligent finance platform will enable them to move at the speed of business. I'll now turn it over to John to share more on our fiscal 2025 performance and our key initiatives for fiscal 2026.

Thanks, Rene. I've recently taken on the role of President and COO, and I'm energized to help scale our next chapter. I'll start with an update on fiscal 2025 progress against our priorities and then cover our fiscal 2026 focus areas. During fiscal 2025, we made great progress executing on our strategy to be the intelligent financial operations platform for SMBs. Throughout the year, we strategically invested to strengthen our core business and build a foundation for future growth. I'll provide a few examples of our key accomplishments during the year. Payments are an integral part of our growth strategy. In fiscal 2025, we rolled out our local transfer experience to over 30 countries. The improved payment speed resonated with customers, and we quickly drove strong adoption. In Q4, over 10,000 customers used this solution, accounting for approximately half of our international payment FX volume. In addition, during fiscal 2025, we significantly grew the use of our Bill debit card among AP customers, with volume increasing nearly 600% compared to fiscal 2024. On the supplier experience front, we launched Supplier Payments Plus in June, and we have already received strong positive feedback from large suppliers with significant SMB transaction volume. The solution streamlines the complex cash application process, and we believe this product can create meaningful transaction revenue as it scales among the largest suppliers in our network. Turning to the accounting channel, we delivered an upgraded console that provides accountants with deeper insights into the financial health of their clients. Our product enhancements and expanded sales coverage for accountants contributed to a 24% year-over-year increase in net new customer adds from the accounting channel. In fiscal 2025, we also achieved new milestones with our Embed 2.0 strategy. As the solution went live, we built out new features, and we refined our partner sales motion. We recently signed a strategic embed partnership with a Fortune 500 software company that underscores our embed opportunity. We'll share more details about this partnership as we get closer to launch. We believe there's a large market for software companies in deploying our embedded finance solutions to support the financial operations needs of their clients. Over the long term, this could collectively translate into tens of thousands of lower mid-market businesses and hundreds of thousands of small businesses using our embedded products. The progress we made against our ambitious fiscal 2025 goals has improved the strength of our business and created strong momentum in the market for Bill.com Holdings, Inc. Shifting to our strategic priorities for fiscal 2026, we are starting the year with significant momentum. We are focused on the following three strategic priorities. First is to drive growth from our integrated platform, which includes our AP, AR, and spend and expense solutions. Second is to expand our addressable market, and third is to innovate with AI to drive a step function change in the value of our platform for SMBs. For each of these priorities, we are focused on executing with speed, driving tangible results, and have defined clear metrics to measure our progress. Now let's dive into each of these priorities. First, to drive growth from our integrated platform, we have prioritized the following three foundational building blocks: front-end modernization, product-led cross-sell, and ad valorem expansion. We are accelerating efforts to modernize our UI to make it easier for SMBs to onboard efficiently and self-serve, which we believe will drive increased velocity of net new customer adds through higher conversion and retention. In addition, we are creating a more unified and intuitive experience that makes it easier for existing AP and AR customers to discover, adopt, and benefit from our spend and expense solution. With tens of thousands of existing Bill.com Holdings, Inc. customers who are great candidates for our spend and expense product, we believe these product improvements will enable significant expansion of multi-product adoption by our customers. Another building block that supports growing usage of our integrated platform is the expansion of our payment portfolio. ACH and checks collectively represent over $270 billion or 85% of our annual payment volume. We now have a broader portfolio of ad valorem offerings to address this opportunity. One that we're particularly excited about is Supplier Payments Plus. We are leveraging the launch momentum and positive feedback to double down on accelerating adoption of Supplier Payments Plus in the current fiscal year, which we expect, combined with the rest of our payment portfolio, will accelerate ad valorem penetration. For our second priority of expanding our addressable market, we are focused on increasing adoption among mid-market businesses and scaling our Embed 2.0 solution. The depth of our advanced workflows and payment solutions have consistently resonated with upmarket businesses. What began as an organic pull upmarket is now a dedicated mid-market focus for Bill.com Holdings, Inc. In fiscal 2025, mid-market customer growth outpaced our overall Bill APAR customer growth by five points. This is just the beginning. There are approximately 300,000 mid-market businesses in the US, representing a very large opportunity for Bill.com Holdings, Inc. Mid-market customers on our platform have two times more TPB than the average SMB and twice as many users on our platform. In fiscal 2026, we will be enabling new capabilities to help global businesses using our AP and spend and expense solutions to easily manage financial operations. We are focused on simplifying the management of international subsidiaries and enabling global teams to spend smarter with our spend and expense solution. We believe this focus on capabilities for larger customers will increase customer growth from the mid-market segment and overall TPV per customer per Bill.com Holdings, Inc. The second lever to support expanding our addressable market is the next phase of our Embed 2.0 strategy. We believe this solution can accelerate market penetration across multiple software verticals and SMB segments. Our progress here will be evaluated based on increasing market penetration, as well as conversion of our embed partner pipeline. For our third strategic priority around AI, we couldn't be more excited about the momentum we have entering fiscal 2026. We are building innovative AI solutions to not only transform our platform but also disrupt the entire market for SMBs. AI has been an important part of Bill.com Holdings, Inc.'s advanced features for years, and we are seeing real traction with our AI capabilities generating tangible value for customers. This year, we will be leveraging the new AI infrastructure we delivered in fiscal 2025 to rapidly introduce finance agents for key workflows in our platform. With Bill.com Holdings, Inc. finance agents, SMBs can skip step-by-step automations to directly accomplish tasks while staying informed. As we introduce new agents, we will be focused on driving adoption across our customers and partners. With these strategic initiatives in fiscal 2026, we are positioning ourselves to accelerate our market penetration and drive greater product adoption among SMBs and their suppliers to enable us to capture the growth upside as the macro environment recovers. I'm excited to officially welcome Rohini Jain as our new CFO. Having built and led high-performance teams in large multinational companies, she has seen firsthand what it takes to support growth at this stage. Her experience and perspective are critical, and I look forward to working closely together as we build the next phase of Bill.com Holdings, Inc. I'll hand it over to Rohini to cover details of our financial performance and outlook for fiscal 2026.

Thank you, John, for your kind words. I'm truly excited to be joining the team at such a defining moment in Bill.com Holdings, Inc.'s journey. As we work together to shape the company's transformation from a $1.5 billion revenue business into a thriving multibillion-dollar enterprise. Our commitment to leveling the playing field for the SMBs resonates deeply with me. Equally important, Bill.com Holdings, Inc. has always had a culture of transparency and accountability, which strongly aligns with my values. I'm committed to carrying this forward through a simple but effective communication of our results, outlook, and progress against our strategic priorities as we drive growth and shareholder value. With these in mind, let's dive into our financial highlights. There are additional details in the supplemental section of our Q4 2025 investor deck, which can be found on the Investor Relations section of our website. In fiscal year 2025, we achieved strong growth and margin expansion, over-delivering on the commitments that we had set out at the beginning of the year. Our core revenue grew 16% year over year, despite headwinds from card acceptance and a muted spend environment. With disciplined management of investment dollars and portfolio efficiencies, we were able to fund and execute on our AI platform while exceeding the top end of our initial guidance for non-GAAP operating income by 23% or $45 million. For the full year, we generated $240 million in non-GAAP operating income and improved our explored profitability. Non-GAAP operating margin ex-float expanded 345 basis points year over year. We delivered solid Q4 results, extending our track record of doing what we say. We accelerated core revenue growth to 15% year over year, landing at $346 million, exceeding the high end of our guidance. Delivered $56.4 million in non-GAAP operating income, 17% more than the top end of our guidance provided one quarter ago. Moving on to some key highlights on our Q4 revenue performance. With our integrated platform, annual revenue growth for Bill APAR accelerated three points sequentially to 13%, primarily driven by transaction revenue strength. Bill APAR transaction revenue grew 15% year over year in Q4. Total payment volume came in strong and grew 13% year over year. In Q4, customers across different sizes increased their spend on the same-store sales basis by 4%. APAR monetization benefited primarily from strong adoption of our emerging ad valorem products and supported by the price increases on ACH and checks as we continue to align pricing with customer value. The strong value proposition of our platform resonates with SMBs. In Q4, we accelerated market penetration, adding 4,700 net new Bill APAR customers, up from 4,200 in Q3. Our net revenue retention rate, inclusive of financial institutions, came in at 94%, reflecting the lower B2B spend environment during fiscal 2025 and continued supplier cost sensitivity towards payment acceptance. Annual customer retention, however, remained very healthy at 86%, underscoring the value and stickiness of our platform. Also within our integrated platform, Bill spend and expense sustained strong growth while delivering an improved contribution margin. Revenue totaled $151 million in Q4, up 19% year over year, driven by 22% card payment volume growth. On the go-to-market front, we continue to increase focus on businesses with higher capacity spend. This led to a five basis points year-over-year increase in rewards as a percentage of card payment volume. Offsetting this, we significantly reduced credit and fraud losses by 14 basis points in Q4 compared to a year ago. Our portfolio approach is working. On the software side, we are seeing increased multi-product adoption across our customer base. It continues to be one of the key opportunities for growth. Joint customers using both Bill APAR and spend and expense grew nearly 40% to 15,800 by year-end 2025. Our diverse payment portfolio remains a key growth driver. Spend and expense continues to scale while our emerging ad valorem products, which consist of pay by card, invoice financing, instant transfer, and Instapay, grew year over year. At the company level, overall ad valorem penetration ex-FI increased to 14.3% in Q4, up from 13.8% a year ago. Turning to profitability. In Q4, we outperformed on all key metrics. Our non-GAAP net income exceeded the high end of guidance, reflecting discipline in managing investments and benefits from leveraging AI in risk management. In Q4, we also reallocated resources to AI as we prepare to launch a suite of agents in the next few months. Before providing detailed guidance, I want to outline our assumptions on overall customer spend and take rate for the year. Given external uncertainty, we are being prudent and assuming flat volume per customer year over year across the portfolio. In Bill APAR, we expect a similar level of take rate expansion as we did in fiscal 2025. We expect spend and expense take rates to be at the lower end of our previously stated range of 250 to 260 basis points for fiscal 2026. As we execute to accelerate growth, we are sharpening our focus on creating efficiency and driving cost optimization. Our fiscal 2026 profitability guidance reflects a disciplined approach, incorporating continued expense management and further structural efficiencies. As confidence in SMB spending improves and our initiatives start to accelerate growth, we will adjust investment levels to capture additional growth opportunities. Now turning to guidance. For fiscal Q1 2026, we expect total revenue to be in the range of $385 million to $395 million and core revenue to be in the range of $348 million to $358 million, reflecting 11% to 14% year over year. Note that Q1 will be the last quarter before we fully lap the impact of a major online advertising platform change to its payment acceptance policy. On the bottom line, for Q1, we expect to report non-GAAP operating income in the range of $53.5 million to $58.5 million. We expect non-GAAP net income in the range of $56.5 million to $60.5 million and non-GAAP EPS to be between $0.49 to $0.52. Shifting to full-year guidance. For fiscal 2026, we expect total revenue to be in the range of $1.59 billion to $1.63 billion, which reflects 9% to 11% year over year growth. This guidance contemplates approximately 160 basis points impact from float revenue, implying a core revenue range of $1.45 billion to $1.49 billion or 12% to 15%. In the latter half of the year, we anticipate growth to improve, driven by our key initiatives and lapping of the full impact from the payment acceptance headwind mentioned earlier. Turning to the bottom line, for fiscal 2026, we expect to report non-GAAP operating income in the range of $240 million to $270 million, which represents a 15% to 17% range in non-GAAP operating margin. This implies an ex-float operating margin expansion of approximately 190 basis points at the midpoint. We expect non-GAAP net income in the range of $236 million to $260 million and non-GAAP EPS to be between $2 to $2.20. For fiscal 2026, we expect stock-based compensation expenses to be approximately $290 million. As the company matures, we are enhancing our focus on GAAP profitability. In that regard, together with our Board, we have extensively reviewed our stock-based compensation, inclusive of executive compensation. As a first step, our fiscal 2026 plan incorporates a significant reduction in grant value, a tighter eligibility criteria, and a shorter vesting period for fiscal 2026 compared to prior years. These changes will reduce dilution impact and continue to drive meaningful benefits in the future years as stock-based compensation expenses related to prior grants wind down. Moving on to the balance sheet. We are well-capitalized, which gives us flexibility to deploy cash through a holistic investment framework. This framework has two priorities: making accretive investments in the business to reaccelerate profitable growth and returning value to the shareholders. We are putting investments behind the key priorities that John outlined earlier. For each of these priorities, we have clear metrics that anchor our execution. We commit to providing regular updates on these leading performance indicators so that our shareholders can have visibility into our progress and measure the effectiveness of our investments. During Q4 2025 and earlier this quarter, we repurchased a total of $100 million of our stock. We see buybacks as a disciplined investment, one that, at current valuations, provides compelling returns. We are reinventing financial operations for millions of SMBs, and we believe the exceptional customer value will translate to significantly greater value for Bill.com Holdings, Inc. Reflecting this conviction, the board has approved a new share repurchase plan. We intend to execute up to $300 million in share repurchases in this fiscal year. The impact of this repurchase is not contemplated in our guidance. In closing, we delivered another year of balanced growth and profitability while continuing to invest in the future. We expanded the breadth and depth of our platform and strengthened our distribution ecosystem. Looking ahead, our focus remains on scaling Bill.com Holdings, Inc. into a much larger and more business. I'm excited about the long-term potential of our company. We are not only operating in the category we created but reinventing it to bring greater ease and intelligence to millions of SMBs. And now we'll open up the call for Q&A.

Thank you. We will now begin the question and answer session. If for any reason at all you would like to remove that question, please press star followed by two. Again, to ask a question, please press star 1. The first question comes from Tien-Tsin Huang with JP Morgan. You may proceed.

Hey. Thanks. So thanks so much. I want to ask first on the revenue outlook here that seems stable core growth at the high end versus the exit rate here in fiscal '25. So I'm just curious, what are the key factors that would drive any deceleration to the midpoint? And I'd love to hear what is holding the company back from achieving the core revenue growth acceleration that you guys were excited about early in the year.

Thank you, Tien-Tsin. I appreciate the question. So let me start first and then Rohini can add some comments as well. First and foremost, let me just step back and just talk about there is a lot of static on this line. Sorry. I just want to make sure folks can hear okay. Before I give this answer. Tien-Tsin, can you hear me okay? And if you can, then I'll

Yeah. I can hear you. Let me mute on my side just in case, Rene. Sorry about

Okay. Okay. Thanks. Great. So, anyways, I think the thing that gives us a lot of confidence and ability to be able to drive growth is this is distracting. I'm sorry. So the confidence in and ability to drive growth really goes back to the foundational elements we've built into the company and the product and the platform. And so when we think about what we were able to do this year, we drove a lot of good growth and strength across mid-market, across account, across the supplier network capabilities, across our payment engines, and across the embedded capabilities. The agented capabilities that we're adding are something that also give us confidence. And so when we step back and look at the opportunity and belief to be able to drive growth and acceleration in the business, it comes back to the foundational elements that we have. And the opportunities that we have based on the years of building the platform across the last, you know, the last few decades here. So I think the opportunity really comes back to a tremendous amount of driving forward across the success that we've had. So I can you just turn the volume off here? Sorry. It's sorry, everybody. It's quite distracting. Okay. So I think that's better. I think with that, I'd like to have Rohini just discuss kind of the guide and how we're thinking about growth in the coming year and the factors affecting that.

Yeah. Absolutely. And, Tien-Tsin, thank you for the question. One of the things I want to start with is we had a strong Q4. There were some strong spend trends that we saw in Q4, especially on our international payments volume as well as the ACH card adoption, which we are very excited about. But as we go into Q1 and the rest of the year, our hypothesis was that Q4 strength, a part of that was driven by some of the spend pull-in with the SMBs as they were starting to expect some of these tariff headwinds to start to hit in fiscal year Q1 for us. So with that, we are being prudent and trying to estimate slightly lower TPV level for APAR. Similarly, as I mentioned in the SME take rate side, over the last year, we've seen a slight deceleration of the take rates. That's really a result of the portfolio mix that SME has. Last year, our TPV remained really strong and grew at 21% on F and E. But the take rate was a little bit impacted by the portfolio mix shift. As we extrapolate that into next year, we expect some of the advertising and the T and E spend that is a higher take rate, having to change part of our portfolio to be under some pressure as the tariff impact on the SMBs become real. They have finite wallet sizes, and as they're trying to accommodate the tariffs in their wallet, their spend on some of these discretionary areas starts to reduce. So those are the two key factors that are impacting us, but overall, we are super excited about all these things that we can control and what we are doing. And John talked a lot about that in his script. The three five is, again, to remind you know, continuing to drive value from the integrated platform, expanding the market as we go upmarket, as well as, last, not the least, innovating with AI where we expect to increase over time the subscription part of our portfolio. So, hopefully, that helps answer your question.

No. It does. Thanks for going through that. I'll be quick in case the line is bad on my side. Just, Rohini, for you, welcome to the call, of course. I just want to maybe get your early impressions that you've been here for a little bit at Bill.com Holdings, Inc. What have you learned about the company? Any surprises? And I'd love to hear if you might do anything differently on the investor relations front, including your approach to guidance.

Yeah. Yeah. Absolutely. Love that question. And I've been for the last six or seven weeks of being here, I have been thinking deeply about this. Of the things that I feel most excited about is the product itself. The products we have are very sticky, really strong. Customers love it. And, you know, it makes for a really strong business model and resilient business model, which I'm very excited about. Secondly, the team that Rene has put together has deep subject matter expertise. They're experts in their field, but are also really building a strong culture of execution and driving outcomes. I really look forward to working with that very accomplished team to drive results in the future. On the things that I'm focused on in the coming months and weeks is really working very closely with you guys to start to strengthen our communication with the investor community overall. Trying to figure out better ways of strengthening our understanding of the business together and communicating the results in the most effective way. So that's going to be something that I look forward to doing with you all.

Thank you. The next question comes from Trevor Dodds with Bank of America. You may proceed.

Is this one for me? Can you guys dive deeper into the agent's opportunity across payables and payments? And then just elaborate on what use cases might be.

Thank you, Trevor. Really appreciate the question. It's something we are very excited about. Maybe before getting into some specific agent cases, let me just step back and kind of frame how I think about the market, the platform we've built, and how AI is going to impact SMBs. First and foremost, the example I think about is before Bill.com Holdings, Inc. it was a do-it-yourself model. Every business had to manage their financial operations on their own. They had to have filing cabinets, sticky notes, checks. They had to reconcile checks. They had to integrate with their ERPs and their accounting packages. This was a ton of work and a lot of time spent doing that meant that the good businesses weren't able to actually drive the strategy forward of the business. We came along then and developed a do-it-for-you, do-it-with-you approach, which is super valuable to the business because we help them along the way. Where I see AI going is taking the do-it-with-you approach and putting it into a do-it-for-you model. What I mean by do-it-for-you is that many of the tasks that are inside of the financial operations category are mundane, rote tasks that can be automated with great AI capabilities. And so if you think about what we've already done from an AI perspective, we've already leveraged AI from a data ingestion process. We have a product called Iva's Inbox Virtual Assistant that has so far ingested over 500 million documents. In the last year, the time saved and the number of bills that actually have increased over 80% of where it was a year ago of the no-touch-based document being entered to the platform. In addition, we've used AI to increase the lending capabilities across the platform. When you think about the credit and extending the ability for our customers to be able to have more card access for their products across the business. We've also used it to stop fraud, which I talked about. And that's just the beginning. We've developed this massive amount of scale. Percent of GDP. It's in some ways, it's staggering. But that's all predicated on the fact that we've got a tremendous amount of data and a tremendous amount of trust. And those are the key elements that actually will drive AI forward. Without that, AI is not going to be successful. If businesses won't be able to use it, to the advantage that we all expect. And so for us, the reason to do it for you is a game changer, is because we're going to be able to take that trust in that data, we're going to be able to wrap that into experiences the customer no longer has to do the effort that it used to take to run their business. Our mission at Bill.com Holdings, Inc. has always been and always will be to make it simple to connect and do business. The operative words there are connect and do. We have a network that has over 8 million entities in it now. And we do over 1% of GDP. And so when you take those two together, the agents that we're going to be able to complete and really add value to our customers for are going to be around intake. So when we think about intake, this is collecting documents. This is entering documents. This is routing documents for our customers so that the approval process happens. It's going to be about supplier management. Last winter, we talked about 1099 capabilities and the acquisition we did there. We have an opportunity to really complete the network with supplier management done by agents. So that buyers and suppliers are automatically connected. It's going to lead to tremendous opportunities from a payment execution perspective, giving businesses choice to be able to execute on the payments that they want. That's super, super, super powerful. And then, you know, I think the last area of agents that we're super excited about is all of that leads to an opportunity for self-serve inside the product and ultimately, an ability to drive insights that businesses haven't had before. Small businesses, and I grew up with them and among them, they don't have the MBA. I like to call my MBA the dinner table MBA. That's what small businesses have. We're going to be able to leverage that data and that trust that we have to create insights on a platform based on the trillions of dollars spend that go through Bill.com Holdings, Inc., the billions of dollars of monthly transactions, and the millions of transactions every month. We're going to be able to leverage that in a way that nobody else is able to do. We are uniquely positioned for this AI revolution, and we are super excited about what we're going to be able to do for our SMB customers. Thank you. Really appreciate it. Thank you, Trevor.

The next question comes from Chris Quintero with Morgan Stanley. You may proceed.

Hey, Rene. Hey, John. Hey, Rohini. Congrats on joining the team here. I want to ask on the mid-market side of the business. Really encouraging to see that be the faster-growing part of the overall Bill.com Holdings, Inc. platform. But I'm curious, as you kind of have a more dedicated motion there and start to grow, how do you think about evolving the go-to-market motion there? And could you start to look at making more partnerships with, like, system integrators and other ISVs? Like, how do you think about that evolving over the next couple of years?

Yeah. Thanks for the question. So we've had a lot of success with the mid-market focus, particularly in fiscal 2025, where that segment of customers grew faster than the overall customer base. And we see the importance of this segment because they're just much larger businesses that have twice the TPB than the average small business, two times the number of users. And so they contribute much faster to the overall growth of Bill.com Holdings, Inc., including on a TPV per customer base. So we have a super-efficient go-to-market motion, as you know. We leverage multiple channels direct to small businesses. We partner with accounting firms and more recently with our embed strategy, both banks and software companies. So we expect to continue to leverage those motions while increasing the allocation of resources that we have that are focused on the mid-market segment. The solutions that we have, the depth of around workflows and advanced features have resonated with mid-market customers for a long time, and we're continuing to see that. So we're also investing behind the capability to serve mid-market customers, in particular, international product capabilities with our spend and expense solution. And so we think we're going to continue to double down on the go-to-market motion that we have now and drive continued success.

Excellent. Thanks, John.

You bet.

Thank you. The next question comes from Darrin Peller with Wolfe Research. You may proceed.

Guys, thanks. And, Rohini, congrats again. I just want to start off with a relook at guidance again because, again, you ended the year with core revenue growth at 15%. You called out that you're going to be lapping or anniversarying the headwinds you had from that the media customer that obviously stopped taking virtual card earlier later earlier in the year. And so, you know, you have one quarter that grow over that. And so I would imagine that you'd have our opportunity to do better unless trends change. And you obviously are showing good execution on the transaction take rate. So just help us understand a little more on the thought process on your outlook for the year. Just how much is conservatism given the underlying macro dynamics? And then maybe either John or Rohini, if you could just rank order the drivers of sequential take rate expansion from here, where do we expect to end the year? An APA or take rate standpoint?

So let me start, and then, John, you can add anything that I missed. So let's talk about take rate for a second. I did have some information on my prepared remarks, but will unpack a little bit more for you. So on the ATAR side, we expect we actually saw 0.4 basis points of take rate expansion in fiscal year 2025. Going into fiscal year 2026, we would expect a similar level of take rate expansion. We have some definitely macro headwinds that we are trying to, you know, contemplate within the guide. And if in the back half of the year, start to ease up and the spend compression turns around, we will definitely be towards the higher end of our guidance. And that's why the range. So coming back to SME, over the last whole year, we see a sequential drop in the take rate. And as I said earlier, to Tien-Tsin's question, that a lot of that has to do with how the discretionary part of our SME portfolio spend is performing. As we started seeing the early results in Q1, we saw some of the Q4 trends normalize earlier on in the year, which is not unexpected. We were actually thinking that's probably going to happen. And that's really because, you know, SMBs have a finite wallet, and they are trying to absorb some of the costs of the tariffs, which is leaving them less money to spend on advertising and T and E and such categories, which is suppressing the take rate within the SME portfolio. So, again, as I said, we're being prudent. I wouldn't say conservative. But as the initiatives that we have in the pipeline start to deliver results as well as the macro turn, we expect to continue to be on the growth trajectory.

I'd just add to that, Darrin, that we're really focused on driving penetration of ad valorem payments overall. We now have a pretty broad portfolio of solutions that address the needs of both large and small suppliers. We saw significant growth in our emerging portfolio in fiscal '25. 37% growth. That's across pay by card, instant transfer, and Instapay. And so we're focused on continuing to scale that with the addition of Supplier Payments Plus. While also expanding our existing the more established products around virtual card and international payments where we actually had a lot of success in fiscal 2025, both stabilizing volume and growing volume on virtual card while managing through some of the volatility associated with international payments in the current environment they're in. So these things combined with our efforts around cross-sell of SNE to the Bill.com Holdings, Inc. base collectively give us confidence in the ability to expand the ad valorem portfolio, which ultimately, that's going to be the biggest driver of expanding take rate or monetization over time.

Very helpful. And then just Rene or John, customer ads continue to trend pretty well. And I'm curious what your thoughts are around where we should expect to model that out for the remainder of the year in terms of your sequential customer adds on both sides of the business or collectively even. And what are the number one or two drivers of that that's incremental to the business that's really helping you add more customers now again?

Thanks, Darrin, for your question. There's a lot of activity across the business because of the breadth and depth of the platform that we have and how we go to market. So, as a reminder, we go direct. We go through accounts. We go through partnerships. On the direct and account side, we've obviously talked about the focus of getting the right customer at the right time. And so for accounts, we had a very strong quarter with the net adds year over year going up significantly. And we believe that our focus in the next year will not really change and that accounts are we have, what, 9,000 accounting firms across the country. We are the ones that have helped them actually create a whole new business line of business for themselves, which is the cast practice. Roughly, by our estimates, 9,000 is around 10% of the overall accounting market. And so for our ability to continue to drive their success, that will be a critical factor for what we do. I think at, you know, the highest level, when we think year over year, we're thinking, you know, roughly the same targets that we've done this year. But that you know, I just want to call out and this opportunity on the third wheel of our ecosystem, which is embed. And this wasn't your question, but I just want to make sure folks understand how impactful and how excited we are about the opportunity that we have. We've worked years to be able to, you know, have this opportunity where our platform can be extended into the right place at the right time for SMBs. Part of our philosophy all along is that you have to meet SMBs where they are. And we have an ecosystem that does that. And so our ability to kind of drive success in FY '26 on Embed is predicated on the success we had in FY '25. Our Embed 2.0 platform is being well received. We mentioned a new deal with a Fortune 500 company that we're super excited about. This company serves, you know, lower mid-market to mid-market customers. Has trillions of dollars of spend that their customers do on their platform, and the opportunity for us to kind of tap into that support the customer activity that's happening already on their platform, with our embedded solution is only because we did all the investment we did in 2025. To enable Embed to be well positioned for this market. You know, I'm super excited about that opportunity because of what we've already been able to, you know, accomplish on that opportunity. I'm also excited about what we just recently signed up that, you know, in the last couple of days here, another partnership that reaches hundreds of thousands of SMBs again, you know, leveraging the Embed 2.0 platform. And so when we think about adding customers going forward, you know, we're going to consistently think about getting the right customers at the right time and from the right source. And part of that is going to be embed, and I wanted to highlight these capabilities on embed and these successes on embed and we will share more as they become launched and available, you know, by our partners. But we are super excited about what we're seeing, the demand in the pipeline, and the opportunity because of the platform we've built over the last few years.

That's very helpful. Thanks, guys.

Next comes from Scott Berg with Needham and Company. You may proceed.

Hi, everyone. Thanks for taking my questions. And, Rene, if you didn't know, my superpower is translating through static, so we'll be just fine here. I just wanted to take a look back at the fourth quarter here. We go back to three months ago when you guided the quarter, I think there was some extra conservatism around payment volumes and take rates. And payment volumes in particular for both categories, APAR and spend and expense, the growth rates kind of accelerated, quarter over quarter. Guess what was better in the quarter than maybe what your slightly more conservative assumptions had ninety days ago.

So, yeah, absolutely. Happy to take the question. What we saw in Q4 was primarily a couple of areas of strength. First of all, as I said earlier, our FX IP product performed really well, which you've heard from other people talk about it as well. We also saw AP card do really well. And that's actually really encouraging for us as we start to diversify the ad valorem portfolio. This is really some of the good green shoots that we're counting on, and you know, diversifying the growth of the portfolio. So those two were the specific areas. And overall, the spend environment in Q4 got better. And as I said, some of that was pulling off Q1 demand and spend that SMBs were trying to do. And we are seeing the proof of that hypothesis come through now early in the quarter. So those, I would say, were the few things that helped us in Q4.

I hope one understood. I guess as a follow-up, I know Rene spoke a lot about agents. It was in John's script as well. How do you think about monetizing those? The feature functionality seems, you know, very much up the, I guess, proverbial alley of what you all do and what the platform's, you know, functions really surround. But how do you think about monetizing that?

That's a great question, Scott. One of the things that we've always done is to make sure that we're adding value for our customers and continue to drive their efficiency and their effectiveness running their business. And so when we think about what we're going to be able to do with agents, we think it's going to be significant value that we're adding. And so it is going to be part of the evolution of the business will be how do we leverage and monetize these experiences for our customers. And I think, Rohini, you might have a few thoughts on that as well.

Yeah. Absolutely, Rene. I'm not as you are with all the AI agents going out in the market and, you know, especially its potential to reaccelerate our subscription revenue growth rates as well. To create a more balance between subscription and transaction revenue portfolios. So as we think about AI monetization, I think of it in three phases. The first phase is really to get a lot of these agents out, driving value to the SMBs, and have them adopt and use it so that we can make them the best product there is available. The second phase will be how we start to bring out the differentiated subscription pricing for some of these, you know, AI use cases that we have. And over the longer term, we want to have sophisticated agents that are helping customers transaction by transaction and build the capabilities to be able to monetize that on a transaction basis as well. So that would be our evolution of how we think about AI monetization. I do want to reiterate our philosophy of first, we drive value to the customers and have the pricing follow it, you know, when the customers start to see the value.

Very helpful. Thanks for taking my questions.

Thanks, Scott.

Thank you. The following comes from Kenneth Suchoski with Autonomous. You may proceed.

Hey. Good afternoon. Thanks for taking the questions. Was wondering if you could help us square the same-store sales growth of 4% in Bill APAR with the TPV per customer at roughly flat year over year. Is that four-point gap consistent with what you've seen historically? Meaning, is that simply a function of newer customers coming onto the platform, or is it driven by, I guess, onboarding smaller customers or churn or anything else?

Yeah. Thanks for the question, Ken. I'd say it's primarily still a mix-related item where we have smaller customers that make up an important part of the customer base primarily by working with our accounting firm partners is where we reach most of those customers. But there's also some level, as Rohini mentioned earlier, you know, we're trying to be prudent with the environment that our SMB customers are operating in and make sure that our expectations are reflective of recent trends that we've seen in spend patterns and make sure that we're not getting ahead of our skis on expectations just given the number of uncertainties that exist for small businesses.

Yeah. Okay. Great. And maybe just one on subscription ARPU and Bill APAR. I mean, that looks like that metric was down a little bit again quarter over quarter. So I was wondering if you could talk about the drivers of that. I was thinking that, you know, as you push upmarket and you get these middle market customers, that would presumably help that figure. So any thoughts there? Just any thoughts on how that metric will trend throughout the year? Thank you.

Yeah. You bet. Great question. And you're right. We saw a slight decline in subscription ARPU. And the main driver there is a slightly lower number of users per customer, and I think that's directly in response to the environment that small businesses are operating in. They're scaling back slightly. Rohini mentioned earlier, you know, that they're typically managing within fixed cost budgets and things like that. And, again, the smaller customers are maybe a little bit more sensitive. So that's something that we're working through. There's also some multi-entity larger businesses that we work with through the accountant channel that could have some implication there just the way the math works. But over time, I think you're right to suggest that we should see subscription ARPU expand by virtue of being more successful with the mid-market customers who are going to just be much larger on average, bring us more users and more volume. And it'll take a little while for the overall mix of our customer base to evolve such that we see that dynamic come through the ARPU number. But that is something that we're expecting.

Great. Thank you, John. That excited we are about the AI agents as well. And over the long term, that would be a key lever for us to drive increased ARPU as well.

Thank you. I would now like to pass the call back to the CEO, Rene Lacerte, for closing remarks.

Well, thank you, everyone, for joining us today. We closed FY '25 with strong growth and profitability results while driving some strong momentum for SMBs. In FY '26, we'll leverage our momentum investments in AI to continue to transform the market. All of us at Bill.com Holdings, Inc. are energized by the opportunity ahead and look forward to sharing our progress with you. Take care, and have a great evening.