Why BILL Stock Has Lost 56% in 2022


what happened

share of the bill (Bill 0.74%), the SMB payments specialist formerly known as Bill.com, has bucked the trend in 2022 with a broad sell-off in software-as-a-service (SaaS) stocks. BILL delivered strong results throughout the year, but a high valuation and a lack of GAAP profits weighed on the stock, and shares fell 56% last year. S&P Global Market Intelligence.

As you can see from the chart, the stock plunged in the spring after the third-quarter earnings report and continued throughout the rest of the year.

Bill Chart

the bill data by YCharts

so what

BILL’s worst stretch of the year came during a three-session span from May 4 to 9, when the stock lost 38.5% after its fiscal third-quarter earnings report was released.

Oddly, the company actually beat estimates in the report, with revenue up 179% to $166.9 million, following earlier acquisitions of DV, an expense management software company, and Invoice2Go, an invoicing and expense-tracking tool for SMBs. This number beat estimates of $157.9 million. Organic growth was also strong, up 74%.

On the bottom line, the company reported an adjusted loss per share of $0.08, compared to an adjusted loss per share of $0.02 — better than the analyst consensus of $0.16 per share.

What prompted the sell-off was BILL’s fourth-quarter guidance, which called for an increase of 133% to 134% year over year, from $182.3 million to $183.3 million. While that was better than the $168.4 million analyst estimate, it represented a sequential increase of only 10%, indicating that management expects its growth rate to slow.

BILL was handicapped by coming into the business at a high price-to-sales ratio near 50, and those valuations have faltered over the past year as interest rates have risen and investors have subsequently pushed into unprofitable growth stocks like BILL and many of its peers. Software-as-a-Service peer.

what now

Going into 2023, BILL’s long-term growth prospects still look promising, as it consolidates market share in the SMB payments sector through a roll-up acquisition strategy as well as organic growth. The company says it generally competes with paper and MicrosoftIt excels when it signs up new businesses, which helps explain its rapid growth rate.

BILL’s most recent earnings report was also promising, with guidance calling for revenue growth of 55% to 57% to $1 billion, meaning it trades at a price-to-sales ratio of just over 10 based on that forecast.

If BILL can maintain that strong growth trajectory, the stock should recover at least some of last year’s losses in 2023.

Jeremy Bowman has posts on Bill.com. The Motley Fool has positions and recommends Bill.com and Microsoft. Motley Fool has a revealing policy.


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