Bill.com Stock Plummets as Revenue Growth Slows

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Bill.com’s stock lost nearly a third of its value even though the bill-payment automation company delivered a solid quarter, adding a record number of customers. Analysts remain bullish, blaming the shares’ slide on a quarter-over-quarter slowdown in growth.

Bill.com

(ticker: BILL) posted a fiscal third-quarter loss of 8 cents a share after the market closed on Thursday, just half of the 16 cents analysts tracked by

FactSet

had expected. Revenue grew 179% year over year to $167 million in the quarter ended in March, higher than the $158 million expected.

In the latest quarter, Bill.com added 11,600 net new customers, the highest gain since it went public, and 3,400 more than the company’s prior best quarter. That said, the stock was down more than 16% to $127.39 on Friday, after falling almost 30% soon after the market opened.

Revenue grew 6.6% quarter over quarter, much lower than the 34.5% growth in the second quarter or the 48.7% growth in the first quarter. And the company said revenue in the quarter ending in June is expected to be $182.3 million to $183.3 million, implying a quarter-over-quarter increase of 9.8% at the higher end of the range.

Needham analyst Scott Berg blamed the slower growth for the stock’s move, noting that the decline came in a period not affected by the pandemic. Berg lowered his price target on the stock to $200 from $370 to reflect lower valuations in the sector but remains a buyer, saying sales in partnerships with financial institutions are just starting to ramp up. Bill.com belongs to the software as a service, or SaaS, technology company space.

Oppenheimer
’s
Brian Schwartz rates the stock as Outperform, saying he is encouraged by upbeat comments from management about demand from small and mid-size businesses. He too blamed the stock’s slide on slower growth, lowering his target for the stock price to $190 from $285 as valuations decline across the market.

KeyBanc analyst, Josh Beck, who has an Overweight rating on the stock, raised his revenue estimates. He highlighted the growth of Divvy, a spending- management platform Bill.com acquired last year whose revenue grew 155% year over year.

To be sure, Evercore analyst Peter Levine is sitting on the sidelines. He reiterated his In Line rating on the stock and has a $175 price target. “We don’t believe we are in the clear as it relates to market volatility especially for the high-valuation names,” Levine said in a note. That said, he is also bullish on Bill.com’s long-term prospects.

Some 88% of analysts tracked by FactSet rate the stock as a Buy.

Write to Karishma Vanjani at [email protected]