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After immediately heading higher on solid top and bottom-line upside in Q4 (Jun), Bill.com (BILL -6%) quickly encountered turbulence, resulting in its shares being sent markedly lower today. The initial jump stemmed from a relatively sound overall performance in Q4, which included a new $300 mln repurchase authorization. However, when peeling back some of the layers, investors uncovered a few weaknesses that erased the initial enthusiasm, primarily BILL's soft FY25 EPS guidance, which emerged due to the company's new planned investments for the year. A rating downgrade at Goldman Sachs is also adding to today's selling pressure.

• Starting with the highlights, BILL's adjusted EPS contracted by less than analysts anticipated at -3.4% yr/yr to $0.57, translating to another bottom-line beat, a common occurrence for the financial automation software provider. Revenue grew by 16.1% to $343.67 mln, exceeding analysts' and BILL's forecasts easily. The company added 4,600 net new customers in its direct and accounting channels, as well as 6,700 new customers in its financial institution channel. Meanwhile, total payment volume climbed 10% higher y/yr to $76 bln.
• These bright spots reflected excellent progress on key initiatives BILL implemented during FY24 to better fight against cyclical headwinds that were moderating B2B spending and shifting payment method preferences. BILL made it its mission to adapt its go-to-market actions, improve product experiences, and work better with its partners. Management noted that these moves enabled improved customer acquisition and stabilized payment monetization throughout the year.
• With signs of stabilization unfolding across BILL's business, the company believes now is the best time to begin investing more aggressively. Management touched on four specific areas where it will allocate resources: expanding its value proposition, such as bolstering card usage and international payments; having dedicated teams talk to suppliers; deepening account relationships; and fortifying its ecosystem. In connection with these investments, BILL is beginning to hire additional workers across its R&D and go-to-market teams.
• As a result, BILL's FY25 adjusted EPS guidance fell well short of analyst forecasts, projecting $1.36-1.61, or a 35% drop yr/yr at the midpoint. The company's FY25 revenue guidance was also a tad light, targeting $1.415-1.450 bln, the midpoint of which missed analyst estimates.

In an economic environment still ripe with uncertainty, investors are not warming up to BILL allocating additional capital toward its new strategic priorities. The company is confident that its investments will position it to deliver core revenue growth of +20% or more in FY26, with profitability expanding during that time. However, this is a long way out, and the market may need some proof that +20% is attainable before sharing BILL's confidence that investing now is the proper move. Until then, shares could continue struggling to mount a comeback.