Bill.comBILL

Key highlights

• Payment volume growth steady: Total payment volume, which is the total dollar amount of all transactions handled by the platform, rose 12% to $88.7 billion from a year ago. This suggests that despite a tougher economy for small businesses, the company is still processing a larger slice of their spending.
• Profitability outlook rising: Management expects total revenue for the full year to reach as high as $1.652 billion and non-GAAP net income to hit up to $2.64 per share. These targets reflect a business that is becoming more efficient as it scales, even while navigating shifting interest rates.
• Transaction fees driving growth: Core revenue grew 16% to $371.1 million, led by an 18% jump in transaction fees which are the costs businesses pay each time they move money. This growth in transaction activity more than made up for a 7% dip in interest earned on customer funds, which fell to $35.4 million.
• Spending business gains share: The spend and expense division, which helps companies manage employee card purchases, saw its revenue climb 21% to $167.2 million. This part of the business now represents 41% of total revenue, up from 38% a year ago, as more businesses use the platform for more than just basic bill pay.
• Significant share buyback authorized: The board authorized $1.0 billion to buy back the company's own stock over the next 24 months. This is a major move for a company of this size and signals that leadership believes the current stock price is a good value for using its $994.7 million in cash.

Our take: This was a strong quarter that showed the business can grow its core fees even when interest income from customer cash starts to cool. The double digit growth in payment volume is exactly what we look for to confirm the platform is winning over more small businesses. It is a very healthy sign for the long term case.