creates a secure environment for businesses to do their finances but they also speed up the reconciliation process and improve document management. supports an important component for any business because enables its clients to focus on operating and maximizing their business for growth rather than worrying about payments, while is uniquely positioned to use its insights from the payments it sees to offer embedded financial services.Īs depicted above, the back office has a lot of moving parts, and simplifies the back office through integrations with more than 200 apps so that accounting databases can be in-sync and properly organized in real-time, eliminating the need for re-entry. Zero To One Strategyīill.com automates the back office and financial operations for SMBs by making it easier for its customers to manage their accounts payable and accounts receivable. However, there are better opportunities to invest in this digital transformation of payments and get indirect exposure to, as the evolution of the open banking paradigm enables new fintechs and services to arise. In this note, I will illustrate that is well-positioned to emerge as the industry standard payments solution for SMBs as businesses undergo a digital transformation. This makes the risk of investing in today outweigh the potential returns. ![]() This results in strong network effects because of how simple it is for SMBs to manage these services, while touches many components of its customers’ businesses, from suppliers and manufacturers to the end clients.īill.com trades at a premium, which is well deserved, but at its current valuation, $23B market cap on $600M in ARR and 50x PS, there is too much optimism priced into the shares. By transforming how SMBs manage their cash inflows and outflows, we create efficiencies and free our customers to run their businesses.” - 's Corporate OverviewĪs continues to build out its platform's functionality, it strengthens its moat, and increases its value proposition because automates more tasks making it easier for its customers to manage and reconcile their payments and finances. We are a leading provider of cloud-based software that simplifies, digitizes, and automates complex back-office financial operations for SMBs. We are champions of small and midsize businesses (SMBs). Our mission is to make it simple to connect and do business. Through a virtual card, ACH payment, paper check, or international wire, makes it easy for SMBs to make payments and keep track of all their accounts from one platform. ( NYSE: BILL) offers SMBs an intelligent business payment platform to optimize their finances. I suspect the latter more than the former, but we’ll have to scout for more data when Divvy shows up in results after the deal closes that data is a few quarters away.Michael Vi/iStock Editorial via Getty Images Investment Thesisīill.com Holdings Inc. That’s a software-level multiple, implying that the company has either incredibly strong gross margins, or had to pay a multiples-premium to buy the company’s future growth today. Divvy sold for around 25x its current revenue rate. Again, this is a March number annualized. “~$4 billion annualized TPV,” or total payment volume.It also lets us know that the company did no more than $4 million or so in March 2020 revenue. Still having its most recent Q1 month generate a three-figure growth rate is good. So, we can’t be sure that its full Q1 2021 growth was over the 100% mark. “>100% revenue growth YoY,” again calculated by leaning on the company’s March results.That puts Divvy’s March, 2021 revenues at around $8.3 million. “~$100 million annualized revenue,” calculated using the company’s March results multiplied by 12.The following numbers come from the deck on the deal, which you can read here. So, this afternoon, let’s unpack the deal to gain a better understanding of the huge exit and the value of Divvy’s richly funded competitors. This will not only allow us to better understand the value of the unicorn at exit, but also its competitors, against which we now have a set of metrics to bring to bear. Luckily for us, released a deck that provides a number of financial metrics relating to its purchase of Divvy. ![]() The better-than-anticipated results and the acquisition news combined to boost the value of by more than 13% in after-hours trading. The company’s adjusted loss per share of $0.02 also exceeded expectations, with the street expecting a sharper $0.07 per share deficit. Per, the transaction includes $625 million in cash, with the rest of the consideration coming in the form of stock in Divvy’s new parent company.īill.com also reported its quarterly results today: Its Q1 included revenues of $59.7 million, above expectations of $54.63 million. Divvy’s growth rate tells us that the company did not sell due to performance weakness.
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