Bill Holdings outlines $1.6B–$1.63B revenue target for fiscal 2026 while advancing AI and embedded partnerships

Earnings Call Insights: BILL Holdings, Inc. (BILL) Q1 2026

MANAGEMENT VIEW

* René Lacerte, Founder, CEO & Chairperson of the Board, stated that BILL delivered first quarter results at the top end of the guidance range for core revenue and achieved a substantial beat on profitability. Lacerte highlighted, “Our focus on driving business results while expanding the value of our platform is working.” Core revenue reached $358 million, up 14% year-over-year, and non-GAAP operating margin reached 17%. Three new Embed partnerships were signed with category-leading software providers, extending BILL’s reach and placing its platform directly within tools used by millions of SMBs. Lacerte noted a significant step forward with partners such as NetSuite, Paychex, and Acumatica, collectively serving nearly 1 million small and midsized customers with an estimated $1 trillion in annual payment volume. The introduction of BILL Cash Account, described as a high-yield, fully integrated operating bank account, was launched to help businesses optimize cash flow, enable faster payments, and earn interest. Lacerte also emphasized advancements in AI, with BILL’s new intelligent AI agents enabling automation capabilities that “are transforming financial workflows from manual to touchless.”
* John Rettig, President & COO, reported that the company expanded its ad valorem payment portfolio and introduced the BILL Cash Account as the first step of a broader treasury capability. Rettig said, “The combination of BILL Cash Account and our broader financial operations platform is a powerful flywheel that enables customers to manage more of their funds and transactions within the BILL platform.” Rettig described the Supplier Payments Plus solution entering commercial scaling and achieving early adoption among large suppliers. The company shifted more go-to-market resources toward larger AP/AR and Spend & Expense prospects to improve unit economics and revenue durability. More than 250 accounting firms were added in Q1, bringing the total to over 9,300.
* Rohini Jain, Chief Financial Officer, stated, “We started the year with significant momentum and continued our track record of delivering on our commitments.” Core revenue grew to $358 million, with non-GAAP operating income at $68 million, $10 million ahead of the high end of guidance. Jain highlighted a 6% reduction in force executed over the last two months, incurring $9 million in restructuring charges, and ongoing efforts to enhance the quality of revenue, shift towards higher-value customers, and optimize rewards and pricing.

OUTLOOK

* For fiscal Q2 2026, total revenue is expected in the range of $395 million to $405 million, and core revenue in the range of $359 million to $369 million, reflecting 12% to 15% year-over-year growth. Non-GAAP operating income is expected between $63 million and $68 million, with non-GAAP net income between $63 million and $67 million and non-GAAP EPS between $0.54 and $0.57.
* For the full fiscal year 2026, core revenue is guided to $1.46 billion to $1.49 billion and total revenue to $1.6 billion to $1.63 billion. Non-GAAP operating income is expected in the range of $257 million to $277 million, or 16% to 17% non-GAAP operating margin. Jain said, “Our updated operating income guidance implies an ex float margin expansion of more than 290 basis points compared to fiscal '25.” Stock-based compensation expenses are projected at approximately $260 million for the year.

FINANCIAL RESULTS

* First quarter core revenue grew 14% year-over-year to $358 million. Non-GAAP operating income reached $68 million. BILL AP/AR revenue grew 10% year-over-year, and subscription revenue grew 6%. Net new customers added during the quarter totaled 4,000, which management said was lower sequentially due to a focus on higher ROI customer acquisition. BILL AP/AR transaction revenue was $123 million, up 12% year-over-year. BILL Spend & Expense card payment volume increased 21% year-over-year, with spend & expense revenue totaling $157 million, a 19% increase. Non-GAAP operating margin expanded over 250 basis points sequentially. The quarter included $9 million in restructuring charges due to a 6% workforce reduction.

Q&A

* Andrew Schmidt, KeyBanc: Asked about the move up market and its impact on customer numbers and unit economics. Rettig explained that targeting mid-market customers is now a deliberate strategy, with these customers typically twice the size in TPV and more likely to adopt multiple products, improving unit economics. Schmidt also inquired about monetization of AI agents. Lacerte responded that early examples, such as the W-9 agent, have delivered meaningful impact and that monetization will be part of a broader pricing strategy, with Rettig adding that pricing optimization is an important priority for fiscal '26.
* Darrin Peller, Wolfe Research: Asked about Board changes and the Rule of 40 target. Lacerte emphasized that “profitability is a part of the DNA of our company,” and Jain said that the Rule of 40 framework will be shared at the upcoming Investor Day. Peller also sought clarity on the source of the operating income beat, to which Jain attributed $5 million to timing related to the workforce reduction and investment pauses, with additional benefit from efficiency efforts.
* Keith Weiss, Morgan Stanley: Inquired about the Embed 2.0 initiative, product overlap, go-to-market, and monetization with NetSuite. Lacerte explained that Embed 2.0 extends BILL’s APIs into partner experiences, is a revenue-sharing relationship, and that the platform can scale to support many partners but focus will remain on those driving value.
* Spencer Anson, Susquehanna: Requested an update on the invoice financing initiative. Lacerte and Jain described strong growth in the emerging ad valorem portfolio, which grew nearly 40% year-over-year, with continued balancing of risk and profitability.
* Bryan Keane, Citi: Asked about AP/AR take rate and drivers of future expansion. Jain reiterated a similar level of take rate expansion as last year and highlighted ongoing success in the emerging portfolio and early-stage Supplier Payments Plus.
* Tien-Tsin Huang, JPMorgan: Questioned the impact of the shift to larger clients and the pipeline for new AI agents. Rettig said the shift supports ARPU expansion, and Lacerte and Jain described a two-pronged approach for agent monetization, with further agents in development.
* Christopher Svensson, Deutsche Bank: Sought details on BILL Cash Account and spend & expense rewards. Lacerte and Rettig detailed the product’s strategic importance and revenue opportunities, while Jain described evolving the rewards structure to prioritize high-value customers and flatten rewards as a percentage of TPV.

SENTIMENT ANALYSIS

* Analysts’ tone was positive, with several congratulating management on results and product advancements. They focused on strategic shifts, monetization of new features, and guidance clarity.
* Management maintained a confident and disciplined tone in both prepared remarks and Q&A. Lacerte repeatedly emphasized the company’s profitability focus and strategic execution. Jain’s language was precise, noting “disciplined expense management” and a “strong profitability lens.”
* Compared to the previous quarter, both analysts and management showed slightly more focus on profitability and strategic execution, with analysts probing on monetization and unit economics and management providing more granular answers, particularly regarding cost controls and revenue quality.

QUARTER-OVER-QUARTER COMPARISON

* The outlook for fiscal 2026 was narrowed slightly, with core revenue guidance unchanged at $1.46 billion to $1.49 billion but with updated float revenue assumptions. Non-GAAP operating income guidance increased, reflecting stronger profitability. The company executed a 6% reduction in force this quarter, not present in the previous quarter.
* Strategic focus on embed partnerships and AI agent deployment intensified, with more detail provided on partner reach (NetSuite, Paychex, Acumatica) and new product launches (BILL Cash Account, Supplier Payments Plus commercial scaling).
* Analysts’ questions this quarter concentrated more on monetization of new features, cost controls, and the impact of strategic shifts, with less concern about macro headwinds than previously.
* Management’s tone was more assertive on cost discipline and revenue quality. Analysts’ sentiment was positive, with fewer concerns raised about macro uncertainty.

RISKS AND CONCERNS

* Management cited a sequential decrease in net new customer adds due to prioritizing higher ROI customer acquisition.
* Jain highlighted ongoing scrutiny of rewards structure and the need to align pricing with value delivered.
* The company incurred $9 million in restructuring charges due to a 6% workforce reduction and is partnering with a third party to assess cost structure.
* Analysts questioned the sustainability of take rate expansion, the pace of mid-market penetration, and monetization of AI features.

FINAL TAKEAWAY

Management emphasized that BILL Holdings began fiscal 2026 with strong momentum, delivering results at the high end of guidance and expanding profitability. Strategic partnerships, new product introductions such as the BILL Cash Account, and advancements in AI are expected to drive durable growth. The company remains focused on disciplined investment, operational efficiency, and enhancing revenue quality by targeting higher-value customers, with confidence in delivering sustained shareholder value throughout the year.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/bill/earnings/transcripts]

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